Allied World Accepts Final Fairfax Financial Exchange Ratio
Zacks Investment Research | Jun 29, 2017 10:11PM ET
Allied World Assurance Company Holdings, AG (NYSE:AWH) has agreed to be acquired by Fairfax Financial Holdings Limited in a final exchange offer of $23.00 cash per share and 0.057937 of the latter's shares. The acquirer announced that it has received all necessary approvals to pursue the transaction.
Shares of Allied World have surged 16% since the acquisition was announced; thereby outperforming the Zacks categorized Property, Casualty and Title Insurance industry’s 4% advance.
In Dec 2016, Allied World had agreed to be acquired by Fairfax Financial for $4.9 billion in a cash-stock deal. The initial purchase consideration was split into $10.00 in cash and $44.00 in Fairfax shares. Per the agreement, the cash consideration could move as high as $30.00.
Subsequently in Mar 2017, the cash consideration was raised to $23 per share. Fairfax increased the cash portion of the purchase consideration through $1.6 billion of investments by minority co-investors in the Allied World acquisition in which Fairfax will own about 67% stake.
Thus each Allied World shareholder will receive 0.057937 of shares Fairfax Financial. Together with a special dividend of $5.00 per share, all Allied World shareholders will earn $28.00 per share into their pockets.
Allied World boasts a market-leading global property, casualty and specialty insurer and reinsurer with increasing global reach. The above transaction will enable this Zacks Rank #3 (Hold) insurer leverage Fairfax’s expertise in Canada, the U.S. and across international insurance and reinsurance markets, enhancing its portfolio in the process. The buyout will help Fairfax consolidate its global presence and diversify its group risk portfolio to emerge as a global leader in property and casualty insurance, reinsurance and investments.
Stocks to Consider
Some top-ranked property and casualty insurers are CNA Financial Corporation (NYSE:CNA) , State National Companies, Inc. (NASDAQ:SNC) and Progressive Corp. (NYSE:PGR) .
CNA Financial offers commercial P&C insurance products, primarily in the United States. The company has delivered positive surprises in three of the last four quarters with an average beat of 12.45%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see .
Progressive provides personal and commercial property-casualty insurance, plus other specialty property-casualty insurance and related services primarily in the United States. The company has delivered positive surprises in two of the last four quarters with an average beat of 4.95%. The stock flaunts a Zacks Rank #1
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State National Companies provides property and casualty insurance in the United States. The company has delivered positive surprises in two of the last four quarters with an average beat of 20.54%. The stock carries a Zacks Rank #2 (Buy).
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