Tower Group International says it will receive $5 million in exchange for the termination of its previously announced agreement to buy American Safety Reinsurance from Fairfax Financial Holdings.
In June, Toronto's Fairfax said it was buying Bermuda's American Safety Insurance Holdings for about $306 million and would subsequently sell subsidiary American Safety Reinsurance to Tower Group.
According to statements today, Tower will receive the payment to terminate the deal in order to allow Fairfax to sell American Safety Reinsurance to Catalina Holdings.
American Safety says Catalina submitted a proposal Aug. 14 to buy American Safety for $30.75 per share, but withdrew the offer four days later.
Instead Catalina and Fairfax reached an agreement of their own. Catalina will buy American Safety Reinsurance from Fairfax after the close of Fairfax's deal to purchase American Safety.
Terms of Catalina-Fairfax deal were not disclosed.
American Safety says its board reaffirms its recommendation to adopt and approve the Fairfax offer of $30.25 in cash per common share. A shareholders meeting is scheduled Aug. 26.
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