Some IPC Deal Okays For Max; As Court Stymies A Validus Move

According to a press statement issued jointly by Max and IPC yesterday, the two companies have satisfied all of the regulatory conditions required to complete the amalgamation agreement between IPC and Max first announced on March 2. The conditions are:

o Approvals from the insurance commissioners of the states of Indiana and Delaware.

o IPC's registration statement on Form S-4 was declared effective by the U.S. Securities and Exchange Commission.

o Notification from the Irish Competition Authority approving the proposed amalgamation.

o Notices from the Council and Society of Lloyd's, the Monetary Authority of Singapore, the U.K. Financial Services Authority and the Irish Financial Services Regulatory Authority, that each of them has approved or acknowledged the proposed amalgamation.

o Early termination of the Hart-Scott-Rodino waiting period granted by the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice.

Validus commenced its stock exchange offer on Tuesday after implementing the first step of its acquisition plan last week–filing a proxy statement with the U.S. Securities and Exchange Commission to solicit IPC shareholders to vote against the Max deal at the June 12 shareholders meeting.

The exchange offer is Step 2 of the three-part plan.

Yesterday, Validus said it also implemented the third step of its plan by filing an application with the Supreme Court of Bermuda to convene a meeting of IPC shareholders to approve a "scheme of arrangement" under Bermuda law.

According to Validus, this alternative would allow Validus to acquire IPC under the same economic terms, if 75 percent of shareholders vote in favor of the deal at a court-ordered meeting, and then IPC shareholders call for a second meeting to be held "if the IPC board continues to be uncooperative." At that second meeting, shareholders would require IPC to approve and be bound by the Validus arrangement and to terminate the IPC-Max deal.

Following the two meetings and approval by the Supreme Court of Bermuda, the scheme would become effective, according to Validus.

Earlier this week, Validus hit a stumbling block in its effort to petition the same court on a related matter–a lawsuit it filed late last month against IPC Holdings and Max Capital Group, suing them over restrictive provisions in their merger agreement that shut other companies out from talking to IPC's board and requiring a $50 million fee to be paid to Max if the IPC-Max deal is terminated.

On Wednesday, the Bermuda court dismissed Validus' application to expedite its suit against Max and IPC.

Reacting to that news, Max said Validus was attempting to have its lawsuit determined before the Max and IPC shareholders meetings. Max noted that "the Bermuda court remarked on Validus's motive and intentions, including that Validus–clearly interested as a rival bidder for IPC–threatened litigation against IPC and Max on the same day it purchased 100 shares of IPC common stock."

"The court held that it was neither reasonable nor fair to have an expedited trial," Max said, also noting that the Bermuda court had ordered Validus to pay Max's and IPC's legal expenses related to the application.

For its part, Validus said the Supreme Court ruling "was only related to the timetable for the proceedings and was not a judgment on the merits of Validus' claims," and "the judge acknowledged that Validus has raised 'serious questions to be tried,'" the firm said.

Validus said the ruling has no effect on its resolve to acquire IPC, "including the exchange offer we announced on May 12, 2009 and the Scheme of Arrangement, neither of which is conditioned on the elimination of the possible termination fee to Max."

Validus has said that a combination between IPC and Validus is superior to one with Max because an IPC-Validus combination would create a market-leading carrier in Bermuda's short-tail reinsurance and insurance markets.

Max says it offers more diversification to IPC's monoline property-catastrophe reinsurance operation by adding long-tail liability business to the mix.