Aspen rejects ‘ill-conceived’ Endurance offer

Aspen Insurance has rejected an unsolicited offer by Endurance Specialty to buy the business describing it as “ill-conceived” and citing concerns over Endurance’s track record and experience of large acquisitions.

Endurance yesterday (Monday) offered $3.2 billion or $47.50 a share for Aspen, which would be funded by Endurance using some 40 percent cash and 60 percent common shares. The deal represented a 21 percent premium to Aspen's closing share price of $39.37 on April 11, 2014 and a 15 percent premium to Aspen's all-time high share price of $41.43 on December 31, 2013.

John Charman, Endurance's chief executive, described the businesses as highly complementary. He said they would form “an attractive diversified platform across products and geographies, and greater market presence and relevance”.

Charman also revealed that Endurance had been trying to engage Aspen in what he described as “confidential and friendly dialogue” since January but had been rebuffed by Aspen management. As such, he stated, “we have no choice but to advise them [the Aspen shareholders] of our proposal directly”.

Aspen quickly rejected the offer. Glyn Jones, the Aspen chairman, said the deal was not in the interests of Aspen or its shareholders. He went onto criticise the nature of the proposal as well as Endurance’s own track record.

“Endurance’s ill-conceived proposal undervalues our company, represents a strategic mismatch, carries significant execution risk, and would result in substantial dis-synergies. Furthermore, most of the consideration to Aspen shareholders would be in a stock that would reflect these problems,” he said.

“Aspen has a proven track record of performance and a clear strategy to increase shareholder value. Endurance has a mixed operating track record, new leadership, an unproven strategy, and no experience with large acquisitions. Moreover, this transaction would be highly disruptive to Aspen’s corporate culture, which has proven to be a significant competitive advantage in the marketplace.”

He went onto make a number of further damning comments about Endurance. He argued that the deal “would burden Aspen with Endurance’s unproven underwriting teams with no clear strategy; an unprofitable insurance business; and a volatile and challenged crop business.”

He also said that Endurance has shown “a public disdain for Lloyd’s”, which he described as the growth engine of Aspen’s international insurance business.