Canopius Group has confirmed that it has made a formal offer to acquire Omega Insurance Holdings at a price of 67 pence per share which values Omega at approximately £164m. The acquisition, which is subject to necessary regulatory consents and acceptance of the offer by Omega shareholders, will be funded by a combination of new shares in Canopius representing a 30% increase in shareholders’ equity, existing cash resources of Canopius, and an increase in the group’s LOC facility.
This transformational acquisition will enable Canopius to significantly increase its underwriting operations at Lloyd’s and establish a platform in the US. It will also deliver substantial scale benefits.
At the same time, Canopius has entered into a strategic partnership with Tower Group, a leading provider of niche-oriented commercial and personal lines property and casualty insurance products in the US. Conditional on the Omega acquisition, Tower will become a 10.7% owner of Canopius, alongside Bregal Capital, the long-term private equity owners of Canopius. Bregal will be making a further investment in Canopius, taking its total investments to date to £146m. Bregal’s share of the company will remain at approximately 85%, with the balance of shares being held by Canopius management.
Canopius and Tower intend to expand their existing business relationships by increasing the share of Syndicate 4444 underwritten by Tower and through developing new sources of business for Canopius via Tower’s extensive distribution network in the US.
Canopius also expects to advise and assist Tower with its goal of establishing a presence at Lloyd’s and facilitate a possible amalgamation of its existing Bermuda reinsurance company with Tower.
Michael Watson, executive chairman of Canopius comments “Our long-held interest in acquiring Omega is well-known and we are pleased to have secured the recommendation for our bid from Omega’s Board. We hope for a speedy completion of this acquisition which will help us realise our ambition of building a leading Lloyd’s business in terms of both quality and scale.
Less well-known is our long-standing relationship with senior executives at Tower which led to a formal business association in July 2011. I have a high regard for Michael Lee and Tower’s very experienced team. They have built a successful customer-focused franchise and created significant value for shareholders. I believe that Canopius will benefit from Tower’s insights as a shareholder and through the opportunity to access US specialty business via Tower’s extensive distribution network."
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