22 April 2014

Endurance accuses Aspen of poison pill tactics

In their ongoing M&A battle, Endurance has accused Aspen’s board of pursuing poison pill tactics in order to fend off Endurance’s overtures.

Endurance said that Aspen’s shareholders rights plan represents a move by the Aspen board to entrench its position and will deny shareholders the opportunity to unlock “significant value” should the deal go ahead.

A poison pill provision would mean that any attempted acquisition by Endurance would trigger the issuance of shares to existing shareholders, who would be allowed to buy them at a discount, thereby diluting Endurance’s offer and making any acquisition more costly.

Such a plan typically forces any acquirer to negotiate directly with the board rather than shareholders and may form part of an attempt to drive value or allow other suitors to enter the fray. It may also be used to fend off any overtures.

Commenting on Aspen’s move, Michael McGuire, CFO of Endurance, says: “At a time when the Aspen board should be seriously considering an opportunity to deliver significant value to its shareholders, it is instead focused on blocking them from receiving that value and on taking actions to entrench themselves. This is not a surprise given the lack of alignment and clear disdain Aspen’s Board has shown for its shareholders in summarily rejecting our proposal without any discussion whatsoever.

“A poison pill is a well-documented defensive step typically taken by an entrenched board of directors. It’s interesting Aspen’s Board adopted a poison pill that divides their shareholders into different categories – good and bad, passive and active – a division that is currently the subject of litigation in an unrelated situation.”