Fairfax-Allied merger offer expires Friday night

Shareholders of commercial insurer and reinsurer Allied World Assurance Company Holdings AG are being urged to accept the offer from Toronto-based Fairfax Financial Holdings Limited to buy Allied World shares because the merger agreement initially announced a week before Christmas expires June 30.

In a press release Monday, Fairfax and Zug, Switzerland-based Allied World said they “expect that all regulatory approvals that are conditions to completion” of the merger agreement, “other than the 90% minimum tender condition, will “be satisfied” on or before June 30.

The merger agreement announced Dec. 18 was valued at the time at nearly US$5 billion.

If it closes, Allied World shareholders would receive a combination of Fairfax shares and cash equal to $US54 per Allied World share.

Related: Fairfax-Allied World deal among the ‘most noteworthy’ of recent insurance M&A announcements: Willis Re

“Allied World shareholders who have not yet accepted the offer are urged to do so as soon as possible,” the companies said in a press release June 26, 2017. They added that the offer and withdrawal rights “will expire” by 11:59 p.m. Eastern time this Friday, “unless the offer is extended.”

Fairfax, founded by Prem Watsa, owns several firms, including Toronto-based Northbridge, Lloyd’s insurer Brit PLC, OdysseyRe and Crum & Forster, a specialty insurer based in Morristown, N.J.

Allied World has a Canadian branch based in Toronto. In Canada, Allied World’s offerings include privacy breach, directors and officers, representations and warranty and energy risks.

Related: Allied World acquisition would allow ‘further diversification’ of Fairfax’s insurance business: A.M. Best

In order to increase the cash component of its offer, Fairfax has third-party partners, including Alberta Investment Management Corporation and Ontario Municipal Employees Retirement System (OMERS), the latter of which announced earlier it will contribute $1 billion and take a 21% ownership stake in Allied World.

Two months before it announced the merger proposal with Allied World, Fairfax announced it agreed to buy American International Group Inc.’s local commercial and consumer insurance operations in Turkey as well as in five countries in South America.

Fairfax announced in February it agreed to buy Auckland-based Tower Limited, which provides insurance in New Zealand, the Cook Islands, Fiji, Papua New Guinea, Samoa and Vanuatu.