Specialty insurer Markel Corporation (NYSE:MKL) announced Wednesday that it had agreed to buy Alterra Capital Holdings Ltd (NASDAQ:ALTE) for $3.13 billion.
As a part of this deal, Tom Gayner’s Markel Corporation (NYSE:MKL) will offer Investors in Alterra a share of 0.43 and $10 in cash per share, representing a premium of about 34% more than Alterra’s closing price of $23.15 on Tuesday.
“In particular, the addition of Alterra’s reinsurance and large account insurance portfolios will serve to diversify and strengthen Markel’s current book of specialty insurance business,” said Steven A. Markel, vice chairman of Markel, in a statement where he believes that Alterra is “an impressive company with proven worldwide underwriting operations in product lines that we believe are highly complementary to Markel’s existing lines.”
As its stock heads for a fourth straight annual gain, the provider of property-casualty coverage has started to expand their operations. Markel chairman believes that the company’s “large-account insurance portfolios will serve to diversify and strengthen Markel’s current book of specialty insurance business.” Markel’s shareholders will own a stake of about 69% of the combined company, while Alterra’s shareholders will own the remaining stake.
Upon closing, two directors designated by Alterra’s current board will be added to the board of directors of Markel Corporation (NYSE:MKL).
The merger of Markel Corporation (NYSE:MKL) and Alterra Capital Holdings Ltd (NASDAQ:ALTE) is deemed to project significant benefits for stakeholders of both companies. Speculation says that the combination of both the companies is going to provide a robust foundation to continue with strong financial performances ahead.
Expressing his view over this merger, Markel commented : “We are very pleased to have reached this agreement to acquire Alterra, an impressive company with proven worldwide underwriting operations in product lines that we believe are highly complementary to Markel’s existing lines.” The Hamilton, Bermuda-based company Alterra Capital Holdings Ltd (NASDAQ:ALTE) is the product of a 2010 merger between the Max Capital Group and Harbor Point.
Citigroup Inc. (NYSE:C) served as the advisor to Markel, while Bank of America Corp (NYSE:BAC) provided legal advice to Alterra Capital Holdings Ltd (NASDAQ:ALTE).
