NU Online News Service, July 21, 3:13 p.m. EDT

Transatlantic Holdings Inc. says the merger offer from Validus Holdings is not a superior one to the agreed deal it has with Allied World Assurance Co. Holdings—at least, not yet.

Though Transatlantic’s board of directors, after meeting with financial and legal advisors, has determined Validus’ unsolicited $3.5 billion offer to Transatlantic is not better than the $3.2 billion merger agreement it has with Allied World, the New York-based international reinsurer says in a statement it is willing to talk more with Validus.

The Validus proposal is “reasonably likely to lead to a superior proposal,” and a failure to stop talks with Validus “would result in a breach of [Transatlantic’s] fiduciary duty,” the company says.

Transatlantic wants Validus to sign a confidentiality agreement before the companies talk more.

However, Transatlantic adds that it is “committed to the terms” of the Allied World merger agreement. The proposed new global-specialty insurer and reinsurer is to be called TransAllied Group Holdings.

“The Transatlantic board reaffirms its recommendations of, and its declaration of advisability with respect to, the Allied World merger agreement,” the statement says.

Allied World, of Switzerland, says in a statement that it is pleased with Transatlantic’s conclusion that its offer is superior to the offer from Validus. “We look forward to completing our merger of equals as early as possible in the fourth quarter,” says Scott Carmiliani, chairman, president and chief executive officer.

Validus also took Transatlantic’s statement as good news, saying in a statement that it looks forward to speaking with Transatlantic about its proposal.

The Bermuda-based company says it made a filing with the U.S. Securities and Exchange Commission to urge Transatlantic shareholders to vote against the Allied World deal.

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