ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG (NYSE:AWH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On December18, 2016, Allied World Assurance Company Holdings, AG
(Allied World) entered into an Agreement and Plan of
Merger (the Agreement) with Fairfax Financial Holdings
Limited, a Canadian corporation (Fairfax), to which, upon
the terms and subject to the conditions set forth therein, Allied
World will be acquired by Fairfax (the Transaction). The
Transaction has been unanimously approved by the boards of
directors of both companies.
The Agreement provides that, upon the terms and subject to the
conditions set forth therein, a subsidiary of Fairfax will
commence an exchange offer (the Offer) to purchase all
outstanding shares of Allied World (the Allied World
Shares), followed by a merger of Allied World into a merger
subsidiary of Fairfax (Merger Sub), with Merger Sub as the
surviving corporation. Each Allied World Share accepted by
Fairfax in the Offer is to be exchanged for the right to receive
(i)a $5.00 pre-closing cash dividend from Allied World (the
Special Dividend), (ii)$5.00 in cash, subject to
adjustment as described below (the Cash Consideration),
(iii)the Fixed Exchange Stock Consideration (as defined below)
and (iv)the Fixed Value Stock Consideration (as defined below)
(and, together with the Fixed Exchange Stock Consideration, the
Stock Consideration).
Fairfax may elect, in its sole discretion, at any time on or
prior to March3, 2017, to increase the amount of the Cash
Consideration from $5.00 to an amount not exceeding $35.00, which
will correspondingly serve to reduce the Fixed Value Stock
Consideration.
Fixed Exchange Stock Consideration means a fraction of a
fully paid and nonassessable subordinate voting share, without
par value, of Fairfax (Fairfax Share) equal to 0.030392.
Fixed Value Stock Consideration means a fraction of a
Fairfax Share equal to the quotient of (x)$40.00 minus the Cash
Consideration minus the Special Dividend divided by (y)the
Acceptance Time Parent Share Price (as defined below); provided,
(i)if the Acceptance Time Parent Share Price is greater than or
equal to $485.65, the Fixed Value Stock Consideration will equal
the quotient of (x)$40.00 minus the Cash Consideration minus the
Special Dividend divided by (y)$485.65; and (ii)if the Acceptance
Time Parent Share Price is less than or equal to $435.65, the
Fixed Value Stock Consideration will equal the quotient of
(x)$40.00 minus the Cash Consideration minus the Special Dividend
divided by (y)$435.65. Acceptance Time Parent Share Price
means the volume weighted average price per Fairfax Share on the
Toronto Stock Exchange for the 20 consecutive trading days
immediately preceding the trading day before the acceptance time
of the Offer (the Acceptance Time), in each case converted
into U.S. Dollars based on the average currency conversion rate
as measured over such 20-day period.
The obligation of Fairfax to consummate the Offer is subject to
customary conditions, including (i)approval by Allied Worlds
shareholders to amend the articles of association to permit a
holder of 10% or more of Allied World Shares outstanding with
full voting rights, to elect the individuals designated by
Fairfax to Allied Worlds board of directors upon or after
completion of the Offer and to approve the Special Dividend and
cancel the previously adopted $0.26 quarterly dividend to be paid
in March2017; (ii)to the extent required by applicable laws and
regulations (based on the total number of Fairfax Shares to be
issued as consideration for the Transaction), approval by
Fairfaxs shareholders of the issuance of Fairfax Shares as
consideration for the Transaction; (iii)a number of Allied World
Shares having been validly tendered and not properly withdrawn
that represents 90% of Allied World Shares outstanding (provided
that, in the event all of the other conditions to the Offer have
been satisfied or waived, Fairfax may elect in its sole and
absolute discretion to waive the 90% condition down to 66 2/3%);
(iv)receipt of governmental consents and approvals (both domestic
and foreign) required to consummate the Offer and the Merger; and
(v)other customary conditions set forth in the Agreement. The
obligation of each party to consummate the
Transaction is also conditioned upon the other partys
representations and warranties being true and correct and the
other party having performed in all material respects its
obligations under the Agreement.
The Agreement provides for certain payments upon termination of
the Agreement under specified circumstances. If the Agreement
is terminated by Allied World or Fairfax as a result of an
adverse change in the recommendation of the other partys board
of directors, Allied World may be required to pay to Fairfax,
or Fairfax may be required to pay to Allied World, a
termination fee of $196 million. The Agreement also contains a
30-day period following signing during which Allied World can
actively seek alternative proposals (the Go-Shop
Period), which, if received and deemed by the board of
directors of Allied World to constitute a superior proposal,
allows Allied World to negotiate a deal and terminate the
Transaction with Fairfax for a lower termination fee of $73.5
million.
The foregoing description of the Agreement does not purport to
be complete, and is qualified in its entirety by reference to
the full text of the Agreement, which is filed with this report
as Exhibit2.1.
The Agreement and the above description of the Agreement have
been included to provide investors and security holders with
information regarding the terms of the Agreement. It is not
intended to provide any other factual information about Allied
World, Fairfax or their respective subsidiaries or affiliates.
The representations, warranties and covenants contained in the
Agreement were made only for purposes of that agreement and as
of specific dates; were solely for the benefit of the parties
to the Agreement; and may be subject to limitations agreed upon
by the parties, including being qualified by confidential
disclosures made by each contracting party to the other for the
purposes of allocating contractual risk between them that
differ from those applicable to investors. Investors should not
rely on the representations, warranties and covenants or any
description thereof as characterizations of the actual state of
facts or condition of Allied World, Fairfax or any of their
respective subsidiaries, affiliates or businesses. Moreover,
information concerning the subject matter of the
representations, warranties and covenants may change after the
date of the Agreement, which subsequent information may or may
not be fully reflected in public disclosures by Allied World or
Fairfax. Accordingly, investors should read the representations
and warranties in the Agreement not in isolation but only in
conjunction with the other information about Allied World or
Fairfax and their respective subsidiaries that the respective
companies include in reports, statements and other filings they
make with the SEC.
Item 8.01. Other Events.
On December18, 2016, Allied World and Fairfax issued a joint
press release. A copy of the release is attached hereto as
Exhibit99.1 and is incorporated by reference into this item
8.01.
Item9.01. Financial Statements and Exhibits.
(d)Exhibits
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EXHIBIT NO. |
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DESCRIPTION |
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2.1 |
Agreement and Plan of Merger, dated as of December18, |
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10.1 |
Parent Shareholder Voting Agreement, dated as of |
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99.1 |
Joint Press Release |
* Schedules have been omitted to Item 601(b)(2)of Regulation
S-K. A copy of any omitted schedule will be furnished
supplementally to the U.S. Securities and Exchange Commission
upon request; provided, however, that the parties may request
confidential treatment to Rule24b-2 of the Exchange Act for any
document so furnished.
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: December 20, 2016
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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, |
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By: |
/s/ Wesley D. Dupont |
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Name: |
Wesley D. Dupont |
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Title: |
Executive Vice President General Counsel |
EXHIBIT INDEX
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EXHIBIT NO. |
|
DESCRIPTION |
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2.1 |
Agreement and Plan of Merger, dated as of December18, |
|
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10.1 |
Parent Shareholder Voting Agreement, dated as of |
|
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99.1 |
Joint Press Release |
* Schedules have been omitted to Item 601(b)(2)of Regulation
S-K. A copy of any omitted schedule will be furnished
supplementally to the U.S. Securities and Exchange Commission
upon request; provided, however, that the parties may request
confidential treatment
About ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG (NYSE:AWH)
Allied World Assurance Company Holdings Ltd is a holding company. The Company provides property, casualty and specialty insurance and reinsurance solutions to clients around the world. It operates in three segments: North American Insurance, Global Markets Insurance and Reinsurance. It leases space in Australia, Bermuda, Canada, England, Hong Kong, Ireland, Labuan, Singapore and the United States. The North American Insurance segment consists of the Company’s direct insurance operations in the United States, Bermuda and Canada. The Global Markets Insurance segment includes all of the Company’s direct insurance operations outside of North America. The Reinsurance segment includes the reinsurance of property, general casualty, professional liability, specialty lines and property catastrophe coverage’s, including property catastrophe coverage written by other reinsurance companies. ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG (NYSE:AWH) Recent Trading Information
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG (NYSE:AWH) closed its last trading session up +1.03 at 53.00 with 5,678,751 shares trading hands.