Validus Notes ‘Substantial Error’ in Max Cap’s IPC Book Value Calculation
Validus Holdings signaled that it isn’t going to go away quietlyi n its bid to gain control of IPC Holdings from rival bidder Max Capital (See IJ web site – https://www.insurancejournal.com/news/international/2009/04/03/99290.htm and https://www.insurancejournal.com/news/international/2009/04/02/99262.htm).
The Bermuda-based company issued a bulletin setting out the text of a letter sent to IPC’s board of directors. It noted that “Max Capital Group Ltd. (‘Max’) has made a substantial error in its calculation of pro forma tangible book value under the terms of Validus’ proposed plan of amalgamation with IPC.”
The letter, signed by Edward J. Noonan, Validus’ chairman and CEO, cited the “publicly disseminated letter sent to you by Mr. Becker of Max Capital Group Ltd. (‘Max’) dated April 2, 2009 and the accompanying presentation materials, regarding the purported benefits of the proposed combination of IPC Holdings, Ltd. (‘IPC’) with Max (pursuant to an Amalgamation Agreement between Max and IPC dated as of March 2, 2009.”
The letter compared the “benefits presented by a combination of IPC with Validus Holdings,” Noonan wrote. “In his letter, Mr. Becker states (and he has been widely quoted in the media stating) that ‘[a] combination with Max delivers 29 percent more tangible book value per share to IPC.’ This is not correct,” he continued. “We, and our financial advisors and SEC counsel, have reviewed this calculation and we would like to provide you with the correct figures.”
The letter then indicates that “Mr. Becker’s calculation understates the pro forma IPC share of Validus tangible book value per share by $2.74, which results in overstating the premium calculated on this basis quite significantly.” Validus backed up the accusation with several attachments to the letter.
It also indicated: “Our SEC counsel has advised us that this error is material and that Max will be required to amend its SEC filings to correct its error.”
In addition the letter stated: “As we noted in our letter dated April 2, 2009, putting aside this error, we believe that this measure is the wrong framework on which to analyze whether the IPC/Max plan is superior to the IPC/Validus plan, and refer you to the analysis in our earlier letter.”
We remain confident that the IPC Board will agree the Validus Proposal is a ‘Superior Proposal’ as defined in your Amalgamation Agreement.
“We look forward to your response to the Validus Proposal.”
Further information, and the documents mentioned are available on the Validus web site at: http://www.validusre.bm/media_centre.htm.
Source: Validus Holdings – www.validusre.bm