American Safety Insurance Holdings, Ltd. ASI announced certain
developments relating to the pending acquisition of American Safety by Fairfax
Financial Holdings Limited.
On August 14, 2013, American Safety received a revised proposal from Catalina
Holdings (Bermuda) Ltd. to acquire 100% of the capital stock of American
Safety for $30.75 per share. After consultation with its financial advisors
and outside legal counsel, the board of directors of American Safety
determined that it would engage in discussions with Catalina to aid in its
consideration of Catalina's latest proposal. The board determined that such
discussions were consistent with its fiduciary duties and the requirements of
the Agreement and Plan of Merger, dated as of June 2, 2013, among Fairfax,
Fairfax Bermuda Holdings Ltd., and American Safety, as amended on August 7,
2013.
Subsequently, American Safety's financial advisor, Bank of America Merrill
Lynch, had separate conversations with Catalina's financial advisor and
Fairfax during which Catalina and Fairfax were told that the board of
directors of American Safety would meet on August 16, 2013 to consider
Catalina's latest proposal. Both Catalina and Fairfax were encouraged to
submit their “best and final” offers for American Safety by the close of
business on August 15, 2013. In addition, American Safety's outside legal
counsel, Shearman & Sterling LLP, provided a draft merger agreement to
Catalina's outside legal counsel and reiterated the board's request that
Catalina submit its “best and final” offer on August 15, 2013. On August 15,
2013, Catalina confirmed its revised proposal of $30.75 and submitted a
revised draft of the merger agreement. Fairfax did not submit a revised
proposal on August 15, 2013.
On August 16, 2013, the board of directors of American Safety held a meeting,
at which representatives of BofA Merrill Lynch and Shearman & Sterling were
present, to review and discuss Catalina's revised proposal. During this
meeting, at the request of the board of directors of American Safety, a
representative of BofA Merrill Lynch contacted the CEO of Catalina to request
an opportunity for members of the board to discuss certain aspects of
Catalina's proposal with its CEO. During this discussion with the
representative of BofA Merrill Lynch, the CEO of Catalina extended Catalina's
offer until the evening of August 18, 2013 to allow the American Safety board
to fully consider its proposal. A call among the Chairman of the board of
directors and the president of American Safety, the CEO of Catalina and other
Catalina personnel, and their respective representatives was subsequently
scheduled for the morning of August 18, 2013. In advance of the call, Shearman
& Sterling provided Catalina's outside counsel with a written agenda for the
call. This call occurred as scheduled on August 18, 2013.
Later on August 18, 2013, representatives of Fairfax and Catalina informed
American Safety that Catalina was withdrawing its revised proposal to acquire
American Safety at a price of $30.75 per share and that Fairfax and Catalina
had reached an agreement whereby Fairfax would sell American Safety's
reinsurance business to Catalina promptly after the closing of Fairfax's
pending acquisition of American Safety. Catalina also confirmed that it had
agreed to vote its common shares of American Safety in favor of the adoption
and approval of the merger agreement, as amended, between American Safety and
Fairfax. Fairfax also stated that Fairfax and Tower Group International, Ltd.
had terminated the agreement between those parties that had provided for the
sale by Fairfax of American Safety's reinsurance business to Tower.
The board has determined, after consideration of the foregoing developments,
to reaffirm its recommendation of the adoption and approval of the merger
agreement with Fairfax, as amended, to the shareholders of American Safety. As
more fully described in the proxy statement dated July 16, 2013 and the
supplement to that proxy statement dated August 9, 2013, pursuant to the terms
of the merger agreement with Fairfax, as amended, if the merger with Fairfax
is completed, shareholders of American Safety will be entitled to receive
$30.25 in cash for each common share of American Safety.
As previously announced, the special general meeting of shareholders of
American Safety to consider and vote on, among other things, a proposal to
approve and adopt the merger agreement with Fairfax, as amended, is scheduled
to be held on August 26, 2013. Shareholders needing assistance with voting are
urged to call or email the proxy solicitor for American Safety, MacKenzie
Partners, Inc., at (800) 322-2885 or proxy@MacKenziepartners.com.
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