Validus to Buy Flagstone Re for $600 Million in Cash and Stock
The deal comes after Validus unsuccessfully tried to buy another reinsurer, Transatlantic Holdings Inc, last year. Transatlantic’s board, which repeatedly rebuffed Validus, accepted a $3.4 billion stock-and-cash deal from property and casualty insurer Alleghany Corp.
Validus will pay $8.43 per Flagstone share, a 19 percent premium to the stock’s Wednesday close. Flagstone shareholders will receive $2 in cash and 0.1935 Validus shares for each share they tender in the offering.
Flagstone shares were set to open up nearly 18 percent on Thursday.
Bermuda-based Validus said Lightyear Capital and Trilantic Capital Partners, which together own more than a fifth of Flagstone, have agreed to the deal.
“The transaction… concludes a lengthy and extensive process in which the Board carefully considered a broad range of strategic alternatives,” Flagstone Chief Executive David Brown said in a statement.
Flagstone has been selling non-core businesses to focus on property and casualty reinsurance. The reinsurer sold its Lloyd’s operations and Island Heritage unit in April.
Shares of Flagstone were up at $8.35 in premarket trading. They closed at $7.06 on the New York Stock Exchange on Wednesday. Validus shares closed at $33.24.