Catlin will become the largest underwriting operation at Lloyd's after its offer to buy rival insurer, Wellington, was accepted for £591m.
The Boards of Catlin and Wellington announced terms of a recommended offer for the “whole of the issued and to be issued share capital” of Wellington.
The offer values each Wellington share at approximately 121 pence and the existing issued share capital of Wellington at £591 million, based on the closing middle market price of Catlin on 27 October 2006.
Stephen Catlin, chief executive of Catlin, said: "The combination of our two complementary businesses will create substantial value for both Catlin and Wellington shareholders.
“In London, the enlarged syndicate will be the largest at Lloyd's in terms of stamp capacity with substantial strength across key sectors of the market.”
As part of the deal, Wellington shareholders will receive 0.17 new Catlin shares and 35 pence in cash for each Wellington share. A Mix and Match Facility will also be available.
The acquisition will create a major international specialty property and casualty insurer with gross premiums of approximately $2.4bn and a pro forma market capitalisation of approximately £1.3bn.
Stephen Catlin will remain CEO of the enlarged group with key Wellington executives becoming an integral part of the group's management team
The deal is subject to the approval of Catlin Shareholders and the satisfaction of relevant regulatory conditions.
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