S&P revises AXIS outlook to negative
AXIS Capital Holdings and Novae Group have announced that their respective boards have agreed on the terms of a recommended all cash acquisition of the entire share capital of Novae by AXIS.
Novae is headquartered in London and is listed in the London Stock Exchange. It is a diversified property and casualty (re)insurance business operating through Syndicate 2007 at Lloyd’s. Its acquisition by AXIS therefore gives the latter a substantially larger footprint in the London market than it had before.
Under the terms of the acquisition, each Novae shareholder will be entitled to receive £7 for each Novae Share. This values the entire existing issued and to be issued share capital of Novae at approximately £467.6 million on the basis of a fully diluted share capital of 66,795,621 Novae shares.
The acquisition will be funded from AXIS’s existing cash resources or, if market conditions are favourable, from new borrowings and it will be implemented by way of a court-sanctioned scheme of arrangement under Part 26 of the Companies Act. Novae is to call a meeting of shareholders to approve the acquisition.
The deal comes almost exactly two and a half years after Axis attempted to merge with PartnerRe, only to then lose out after EXOR made a successful hostile bid for PartnerRe.
“We are very pleased to announce this proposed acquisition of Novae which will create a c.$2 billion player in the London specialty market, anchored as a top 10 insurer in the Lloyd’s market,” said Albert Benchimol, president and CEO of AXIS. “The acquisition is fully aligned with AXIS’s international specialty insurance growth strategy and will combine two highly complementary businesses, substantially enhancing our depth and breadth of product, underwriting expertise, and leadership capabilities to better serve our clients and brokers.”
Benchimol said that AXIS was excited about the opportunity to leverage the focused and profitable specialty insurance business Novae has created as part of a substantially larger group, with a larger capital base and a global platform. He added that AXIS expects the combined operations to benefit substantially from investments already made by AXIS to drive efficiencies across its international specialty insurance business and firmly believe this combination will create significant value for AXIS’s shareholders with limited execution risk. In addition he claimed that the transaction is expected to deliver meaningful earnings and ROE accretion within the first year after close.
There is no information as yet as to how the merger will be carried out, or if it would lead to any redundancies amongst Novae staff.
However, Benchimol stated that: “We very much look forward to welcoming Novae’s employees to AXIS. Novae’s business is underpinned by the high calibre of its team, including its market leading underwriting talent, who we expect to thrive at AXIS, benefitting from access to a global platform and expanded resources. Our organisations share likeminded corporate cultures and we are deeply committed to ensuring a smooth integration process and creating a positive, collaborative environment that will breed success.”
The board of Novae said that it considers the terms of the acquisition to be fair and reasonable. As a result the Novae directors have confirmed that they intend unanimously to recommend that Novae shareholders vote to approve the scheme.
AXIS, Novae, M&A, Lloyd's, North America, Europe, Albert Benchimol, Peter Wilson, Robert Forster, Bermuda