Fairfax Financial Holdings Limited and American Safety Insurance Holdings, Ltd., have entered into a merger agreement pursuant to which Fairfax will acquire all of the outstanding shares of American Safety common stock.
American Safety stockholders will receive $29.25 per share in cash, representing an aggregate transaction value of approximately $306 million. The price represents a premium of 22.1 percent to the closing price of American Safety common stock on May 31, 2013, the last trading day prior to the announcement. The transaction is expected to close in the fourth quarter of 2013.
The board of directors of American Safety, after unanimously determining that the merger was in the best interest of American Safety and its stockholders, unanimously approved the merger agreement and resolved to recommend that American Safety's stockholders vote to approve the merger. Certain of the directors and executive officers of American Safety, who beneficially own approximately 10 percent of the outstanding shares of American Safety common stock, have agreed to vote their shares in favor of the merger.
The transaction is subject to customary conditions, including approval by American Safety's stockholders and regulatory approvals. There is no financing condition to consummate the transaction.
Concurrent with the execution of the merger agreement with American Safety, Fairfax entered into a purchase and sale agreement with Tower Group International, Ltd., pursuant to which Fairfax agreed to sell the Bermuda subsidiary, American Safety Reinsurance, Ltd., promptly upon acquiring it from American Safety. That transaction is subject to customary conditions including regulatory approvals.
The acquisition is expected to be financed using internal resources and is not expected to require Fairfax holding company cash. Fairfax expects several of the American Safety specialty lines groups to move to Crum & Forster and Hudson Insurance Group. The acquisition is expected to provide the Fairfax group with $480 million of additional investable assets.
Prem Watsa, chairman and chief executive officer of Fairfax, said, “We look forward to working with the talented professionals in the American Safety team. We expect to enhance our insurance operations in certain specialty lines of business with American Safety's expertise.”
Stephen R. Crim, president and chief executive officer of American Safety said, “We are excited to become part of the Fairfax organization, which is highly regarded in the insurance industry. Our specialty insurance platform will fit well into subsidiaries Crum & Forster and Hudson Insurance Group, facilitating a seamless transition for our customers. I want to express my deep gratitude to our employees, business partners, management, and board for their role in building our successful specialty insurance company.”
Bank of America Merrill Lynch is acting as exclusive financial advisor to American Safety and Shearman & Sterling LLP is acting as legal counsel to American Safety.
Torys LLP is acting as legal counsel to Fairfax.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].