Aspen Insurance rejects “ill-conceived” takeover by Endurance Specialty

Aspen Chairman Glyn Jones used sharp words to strike down a takeover bid initiated by Bermuda's Endurance Specialty.

Motor & Fleet

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Aspen Insurance Holdings Ltd. vehemently struck down a $3.2 billion offer from property/casualty insurer Endurance Specialty Holdings to buy the company, calling the proposal “ill-conceived” and a “strategic mismatch.”
 
Bermuda-based Endurance had reportedly been attempting to discuss a possible takeover of Aspen since late January, but was met by repeated rebuffs. Its final offer of $47.50 per share—21% more than the April 11 closing price of $39.37—was ultimately rejected.

Aspen Chairman Glyn Jones had harsh words for Endurance’s proposal, commenting:

“Endurance’s ill-conceived proposal undervalues our company, represents a strategic mismatch, carries significant execution risk and would result in substantial dis-synergies,” Jones said in a statement.

Endurance, meanwhile, characterized its negotiations with Aspen as “confidential and friendly.” Aspen’s refusal to consider a deal denies the insurer’s shareholders “the ability to understand and attain the clear financial, operational and strategic benefits of this transaction,” Endurance said.

Endurance believed its own offerings in crop insurance would complement Aspen’s products, particularly in its operations with Lloyd’s of London.

Harry Fong, an analyst with MKM Partners, told investors Endurance’s proposed acquisition may signal the start of a “period of consolidation in the P&C space.”

“Growth by acquisition rather than undercutting the competition makes sense, especially when the acquisition price is near book value,” Fong wrote, noting the remarkably soft P/C market. As such, eventual industry consolidation is considered inevitable by industry analysts.

Such an unsolicited offer is rare for the insurance industry, however. Aspen share prices jumped 11% on the news to $43.77. Endurance, meanwhile, dropped 2.8% to $52.32.

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