Fairfax to buy Brit for £1.22bn

Financial services company Fairfax has agreed to buy re/insurer Brit for £1.22 billion.

Private equity firms Apollo Global Management and CVC Capital, Brit’s two biggest shareholders, have accepted the bid.

Under the terms of the offer, Brit shareholders will receive 305p in cash per share, inclusive of the expected 2014 final dividend.

The Brit offer price implies a price to net tangible assets multiple of 1.73x based on Brit’s net tangible assets of £704.4 million as at June 30, 2014.

Fairfax said it was fully supportive of the management’s current business plan and strategy and intends to retain Mark Cloutier, the chief executive officer (CEO) of Brit, and as much of the existing key management team as possible

Cloutier said: “Our business is complementary to their group’s current offering and the deal represents an exciting opportunity to continue our story on an even stronger footing. Our position as a market-leading global specialty insurer and re insurer and our major presence in Lloyd's make us an attractive addition to Fairfax’s global footprint.

“There is very little crossover in our respective international operations, thus allowing Fairfax to further diversify its portfolio while enabling Brit to leverage Fairfax’s existing relationships and expertise in the international insurance and reinsurance markets. The combination will enable us to enhance our global product offering and provide us with expanded underwriting opportunities and distribution channels. We believe this is a great fit for both companies, our employees, customers and trading partners.”

Prem Watsa, the Fairfax chairman and CEO, added: “We welcome Mark Cloutier and his market leading specialty insurance and reinsurance team at Brit to our expanding global specialty platform. Brit has an outstanding track record over the last ten years and will continue to operate on a decentralised basis once owned by Fairfax.

“With the acquisition of Brit, Fairfax will have a significant top five position at Lloyd’s of London. We look forward to working with Mark and the entire Brit team to further develop their business over the longer-term.”