**UPDATE: XL Group Agrees GBP2.8 Billion Deal To Acquire Catlin**
LONDON (Alliance News) – XL Group PLC and London-listed Catlin Group Ltd Friday said they’ve agreed the terms of a GBP2.79 billion deal that will see XL acquire its re-insurance peer.
Catlin last month received a takeover approach from XL Group, which is listed on the New York Stock Exchange, valuing the FTSE 250 company at 699 pence per share.
According to a joint-statement Friday, Catlin shareholders are set to receive 388 pence and 0.130 new XL shares, plus an expected 2014 final dividend of 22 pence in cash to be paid by Catlin. This values Catlin at about 715.3 pence per share, based on XL’s USD35.42 closing share price on Thursday and a sterling exchange rate of USD1.5084 on the same day, as well as the final dividend.
Catlin shares were up 4.5% at 690.00 pence per share on Friday, second in the list of best-performing stocks on the FTSE 250.
The approach received in mid-December, under which shareholders would have received 410 pence in cash, the same number of XL shares and no final dividend, had been based on an XL share price of USD35.01 and a pound exchange rate of USD1.573.
Catlin said Friday that shareholders also are likely to receive a 12 pence per share special dividend from last month’s sale of its stake in Box Innovation Group Ltd, which trades as insurethebox, to Aioi Nissay Dowa Insurance Company of Europe Ltd for GBP85 million. The sale of Box Innovation is expected to complete in the first quarter.
“We believe the transaction will accelerate each company’s strategy, and address the meaningful structural changes we see shaping the [property and casualty] sector,” Mike McGavick, XL’s chief executive, said in a statement. “Specifically, the combination will add immediate scale in specialty insurance, it will create a more efficient and more capable global network by bringing our two infrastructures together, and it creates a top 10 reinsurer with expanded alternative capital capabilities.”
McGavick also welcomed plans for Stephen Catlin, Catlin’s founder and chief executive, to become a member of the combined group’s board.
“XL is a compelling partner for the Catlin business,” Stephen Catlin said. “Both businesses have been built on underwriting excellence and benefit from strong cultural compatibility. Together, the combined entity will be a market leading global specialty and property catastrophe insurer which will be far better positioned to respond to the changing dynamics that are impacting the broader insurance and reinsurance markets.”
“We expect the enlarged business to benefit from increased diversification, significant further economies of scale, strengthened franchises in each of its markets and an improved standing with intermediaries,” the Catlin CEO added.
While XL Group will retain its legal name, it will operate under the XL Catlin trade name.
Mike McGavick will be chief executive, while Stephen Catlin will be executive deputy chairman
JP Morgan Cazenove and Evercore advised Catlin on the deal.
By Samuel Agini; [email protected]; @samuelagini
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