NU Online News Service, Sept. 12, 11:06 a.m. EST
A major shareholder advisory firm has recommended shareholders of Transatlantic Holdings vote against its proposed merger with Allied World Assurance.
A report from Institutional Shareholder Services (ISS) also says Allied World shareholders should vote in favor of proposal to form a new company to be called TransAllied.
The proxy voting and advisory firm says Transatlantic shareholders have "a better chance of maximizing the value of their investment by voting down the [Transatlantic-Allied World] transaction."
Davis Selected Advisers Ltd., the largest shareholder of Transatlantic Holdings Inc., has also opposed the company's acquisition by Allied World.
The news was welcomed by Validus Holdings, whose unsolicited cash-and-stock offer was rejected by Transatlantic late in July, about a month after New York reinsurer Transatlantic and Swiss-based specialty insurer Allied World announced an agreement to merge.
Validus used the ISS report to remind Transatlantic shareholders to vote against the Transatlantic-Allied World proposal. Shareholders are scheduled to vote Sept. 20.
"ISS' recommendation validates what we have consistently stated — we believe that a vote against the Allied World takeover will send a strong message that the Transatlantic board of directors should terminate the inferior Allied World proposal and enter into discussions with Validus," says Edward J. Noonan, chairman and CEO of Bermuda-based Validus in a statement.
Berkshire Hathaway's National Indemnity Co. has also put in a competing cash bid for Transatlantic.
Give the choices, "the deal with [Allied World] is not an obvious choice," says ISS.
Transatlantic says it is disappointed with the ISS report because "a merger with Allied World would accelerate our ability to accomplish our strategic objectives."
The Transatlantic board continues to recommend the merger, the company says in a statement.
Allied World adds that while it is pleased with the recommendation to its shareholders, it too is disappointed with the advice for Transatlantic shareholders as it asks them to "take the risk that a higher offer for Transatlantic will not emerge if the merger with Allied World is defeated."
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