Flagstone offered $1.8bn for Validus

Validus has announced it is to buy IPC Holdings for about £1.01bn ($1.65bn). The acquisition announcement comes after Validus endured a drawn-out battle with rivals Max Capital and Flagstone Reinsurance Holdings, which entered the fray last week with a $1.8bn bid.

Flagstone chairman Mark Byrne said: “We are surprised and disappointed that the IPC board chose the Validus offer over our proposal, which we believed offered superior economics in the short term and better prospects in the long term. As we close the file on this matter, we wish the board, shareholders and employees of IPC well.”

IPC shareholders will receive $7.50 in cash and 0.9727 Validus voting common shares for each IPC common share. The transaction is due to be completed in the third quarter of 2009. The deal is still subject to customary closing conditions, including Validus and IPC shareholder approval. The deal will result in Validus shareholders owning about 62% of the combined company while IPC shareholders will own around 38%.

“Validus will have significantly greater size and scale to take advantage of attractive rate trends across our business lines and growing overall demand for reinsurance from capital-constrained businesses. In addition clients of both companies will benefit from our strong commitment to existing business lines, superior technical expertise and increased capacity to meet their needs,” said Validus chief executive Ed Noonan.