Reinsurance News

Enstar’s latest Watford bid could lead to a “Superior Proposal”

20th October 2020 - Author: Luke Gallin

The unsolicited, non-binding proposal from Enstar Group Limited to acquire the common shares of Watford Holdings Ltd. could reasonably be expected to lead to a “Superior Proposal” as defined in Watford’s merger agreement with Arch Capital Group Ltd., according to the firm’s Board of Directors.

enstarOn October 15th, legacy acquirer Enstar wrote to the Watford Board of Directors with a revised offer of $686 million, and also criticised its handling of previous takeover attempts and a subsequent agreement with Arch.

Earlier in the month, it was revealed that Arch had entered into a definitive agreement to acquire all the common shares of the total return reinsurer, in an all-cash deal valued at approximately $622 million.

The agreement between Watford and Arch came just days after Enstar asked Watford Re to enter into a non-disclosure agreement to let it begin due diligence on a potential acquisition, following Enstar’s letter to the Board indicating its desire to acquire all of the company’s outstanding shares.

Now, the Board of Directors at Watford has determined, in its good faith judgement, that the latest proposal from Enstar to acquire its common shares for $34.50 per share, subject to confirmatory due diligence, “could reasonably be expected to lead to a “Superior Proposal” as defined in the Company’s merger agreement with Arch Capital Group Ltd. and that the failure to take such action would be inconsistent with the directors’ exercise of their fiduciary duties under applicable law.”

Tremor - The modern way to place reinsurance

As explained by Watford, under the agreement with Arch, the determination by the Board allows Watford, subject to Enstar entering into an Acceptable Confidentiality Agreement with Watford, to provide information to and conduct discussions and negotiations with Enstar.

However, “The Company’s Board has not determined that Enstar’s proposal in fact constitutes a Superior Proposal under the current provisions of the merger agreement with Arch and has not changed its recommendation in support of the merger with Arch,” explains Watford.

Ultimately, notes the firm, there can be no assurances that the discussion with Enstar will result in the Board determining that the latest bid is a “Superior Proposal” or the consummation of a deal that is superior to the pending transaction with Arch, or that the terms of any new deal will be the same as those reflected in Enstar’s proposal.

Print Friendly, PDF & Email

Recent Reinsurance News