Bidding war for Aspen Insurance?

"Looking over the landscape, we do not see too many competitors that would be willing to pay a similar premium to book value," says Janney's Ryan Byrnes, commenting on Endurance Specialty Holdings' (ENH -0.3%) hostile offer of 1.16x book value for Aspen Insurance Holdings (AHL +2.9%).

"The chance of another acquirer coming into the picture is uncertain," says Sterne Agee. "While we have seen competing offers in past insurance transactions over the last several years, the deal multiples in those instances were close to/below book value.”

Barclays isn't so sure, saying other suitors looking to increase their scale could emerge. Possible candidates: Allied World Insurance (AWH +0.7%) and Validus Holdings (VR +0.2%) - both were involved in 2011/2012's bidding war for Transatlantic, in which Alleghany ended up buying the company in a $3.4B deal.

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Comments (1)
  • mgpaisan
    , contributor
    Comments (127) | Send Message
    While the insurance industry, especially the Bermuda market, has recently begun a wave of hostile takeover attempts, it does not seem that there is much more value in Aspen than the currently offered price by Endurance. That said, the P/C and Reinsurance industries are extreme "followers of action". Most managements have not had an original thought in many years. Hence, given the "copy cat" nature of the managements in that business, it is conceivable that another insurer might make a counter-offer for Aspen. However, any additional offer would have to have some creative financial and capital execution for it to make sense. The overall value would likely be comparable to ENH's bid, but with some financial creativity, a new suitor could emerge. The problem is that most "A+ Students", who would have the creativity and financial strategy to do so have fled the industry in recent years. Hence, the "C+ Students" left in the industry simply don't have the wherewithal to properly execute such creativity. As long as the social hindrance to proper M&A activity in the Bermuda market persists, there will continue to be hostile activity...
    17 Apr 2014, 10:13 AM Reply Like
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