Financial services holding company Fairfax Financial Holdings
Limited recently joined hands with Bermuda based insurer,
American Safety Insurance Holdings Ltd.
) to enhance its insurance operations in some specialty business
As per the agreement, Fairfax will acquire all the outstanding
shares of American Safety. The purchase consideration equates to
$29.25 per share in cash or an aggregate value of nearly $306
million. The purchase price is at a 22.1% premium to the closing
price of American Safety as of May 31, 2013.
The deal is expected to culminate in the fourth quarter of 2013
and is pending regulatory approval as well as approval from
American Safety's stockholders.
After a comprehensive delve into the prospects of the
transaction, the board of directors of American Safety agreed
upon the merger agreement and recommended that the shareholders
of the company approve the same. Some executives of the company,
who have 10% stake in the outstanding shares of American Safety
have supported the decision and agreed to vote for the merger.
Fairfax will utilize internal resources to fund the transaction
and will not need holding company cash for the purpose. On
closing, many of the specialty lines of American Safety are
expected to be added to two subsidiaries of Fairfax. These
include Crum & Forster and Hudson Insurance Group. The
acquisition will render Fairfax in receipt of $480 million of
additional investable assets.
Simultaneously, Fairfax inked a purchase and sale agreement with
Tower Group International Ltd.
). After completing acquisition of American Safety, Fairfax
intends to sell American Safety Reinsurance Ltd. (ASRe), a
subsidiary of American Safety to Tower Group for $59 million.
This deal is expected to culminate in the second half of 2013 and
is subject to regulatory approval. As per the deal, the
operations and employees of ASRe will join the Bermuda reinsurer
of Tower - Tower Reinsurance Ltd. (Tower Re).
Among others who recently engaged in acquisition agreements,
Fidelity National Financial
) inked a deal to acquire Lender Processing Services Inc. (LPS)
for $2.9 billion or $33.25 per share.
American Safety currently carries a Zacks Rank #1 (Strong Buy).
Fidelity carries a Zacks Rank #2 (Buy). Among others in the
Global Indemnity plc
) shares the same Zacks Rank as ASI.
AMER SAFETY INS (ASI): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
GLOBAL INDEMNTY (GBLI): Free Stock Analysis
TOWER GRP INTL (TWGP): Free Stock Analysis
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