Max Capital backed to win tug-of-war with Validus for IPC

Max Capital backed to win tug-of-war with Validus for IPC

IPC Holdings is expected to approve a deal with Max Capital Group despite a late bid from Validus Re, an equity analyst has told Reactions.

Both Max Capital and Validus are claiming "superior" offers although industry opinion seems to be favouring Max Capital wining the tug-of-war for the Bermudian company.

Validus' proposal came nearly a month after IPC and Max Capital agreed on a prospective merger deal. On March 1, IPC and Max Capital announced that they would combine operations in a stock deal valued at around $912m, in which Max Capital shareholders would receive 0.6429 IPC shares for each Max Capital share and IPC shareholders would own approximately 58% of the combined entity. Validus offered a stock-for-stock deal, in which each IPC common share will be exchanged for 1.2037 Validus common shares.

Mark Dwelle of RBC Capital Markets told Reactions that Max Capital "have a deal and I expect it will be accepted".

Dwelle's opinion supports an article run by Reactions earlier this week in which Dean Evans of Keefe, Bruyette & Woods predicted that IPC shareholders would prefer the deal on the table from Max Capital. Marty Becker, CEO of Max Capital, also told Reactions yesterday that he is confident his firm's deal with IPC will go ahead.

In a research note Dwelle said: "We expect IPCR management to push for the combination with Max Capital as we think it makes more sense from a strategic and diversification standpoint.

"We believe that one of the reasons IPC selected Max Capital was its desire to seek a partner that meaningfully diversified its position as a mono-line property catastrophe insurer. We think that without a considerable premium Validus Re may face some resistance in garnering all the necessary votes to complete the deal."


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