IPC Says It Will Talk To Validus, But Seek Other Suitors As Well

NU Online News Service, June 23, 4:10 p.m. EDT

IPC Holdings, Ltd. said it will reach out to other parties to "solicit interest in a possible transaction" in addition to engaging in discussions with Validus Holdings, Ltd. about its offer, the company said in a statement today.

The board of IPC had arranged for a merger with Max Capital, Ltd., but after Validus made a hostile takeover move with a sweeter bid offer IPC shareholders voted 10 days ago to reject the Max Capital, Ltd., proposal.

Validus has called the heavy vote against the Max deal a "strong message" that shareholders want a Validus transaction to move forward.

For its part, IPC said it engaged in discussions with Validus but is also pursuing other options.

Kenneth L. Hammond, chairman of IPC, said IPC and Validus cannot agree on a price. Mr. Hammond said Validus's offer price of shares, amended on June 8, "is down by nearly 10 percent since IPC's shareholder vote [against the Max deal] on June 12, and represents a 22 percent discount to IPC's May 31 book value. Validus's stock price has also declined by 16 percent since its initial offer for IPC on March 30, 2009, reducing the premium to IPC shareholders to a mere 3 percent."

While discussions have moved forward, Mr. Hammond said, "IPC's board continues to recommend against the current Validus offer. At the same time, we are willing to work with Validus and encourage Validus to improve the terms of its offer."

Validus, meanwhile, said it will not revise the economic terms of its offer. The company said in a statement, "We have offered a number of concessions to IPC to be responsive to their stated concerns, including allowing IPC's board the right to perform a limited market check after the signing of an agreement with Validus, eliminating the book value termination right so that the closing will not be affected by catastrophe risk, and agreeing to an enhanced severance plan for IPC employees.

"However, none of the information that we have received from IPC would justify changing the economic terms of our offer."

The company added, "While we believe that reaching a consensual amalgamation transaction would be in the best interests of IPC and its shareholders, Validus remains strongly committed to acquiring IPC and will continue to pursue alternative paths to complete a transaction, including our Exchange Offer and previously announced Scheme of Arrangement.

"In addition, we will proceed with our plan to replace the IPC board at a special meeting of IPC shareholders in order to facilitate delivering the attractive economics of Validus' offer to IPC's shareholders."

Validus' exchange offer involves making an offer directly to IPC shareholders to exchange IPC common shares for a greater number of Validus common shares.

The scheme of arrangement would allow Validus to acquire IPC if 75 percent of shareholders vote in favor of a 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."

IPC's Mr. Hammond said, "In the event that an appropriate transaction is not agreed to and completed in the very near future, IPC will continue, as it has for the past 15 years, as a standalone company.

"We have recently commenced a search process for a new chief executive officer. We believe a comprehensive review of all alternatives for value maximization post-hurricane season would allow for a greater number of potential interested parties as well as greater certainty of value and timing of closing a deal."