RenaissanceRe Holdings To Acquire Platinum Underwriters In $1.9 Bln Deal

(RTTNews) - Reinsurance and insurance provider RenaissanceRe Holdings Ltd. (RNR) agreed Monday to acquire smaller peer Platinum Underwriters Holdings, Ltd. (PTP) for $76.00 per share in stock and cash deal valued at about $1.9 billion. The deal, unanimously approved by the Boards of Directors of both companies, is expected to close in the first half of 2015.

Following the announcement, Platinum Underwriters' share are soaring more that 18 percent in pre-market trading.

"It is a well-run company and its integration with RenaissanceRe will benefit our combined companies' clients through an expanded product offering and broker relationships. It will also accelerate the growth of our U.S. specialty and casualty reinsurance platform and as a result, create enhanced value for our shareholders," RenaissanceRe President and CEO Kevin O'Donnell said in a statement.

The deal will help Pembroke, Bermuda-based RenaissanceRe to expand its market presence, product offerings and client relationships as well as accelerate its growth in the U.S. specialty and casualty reinsurance business.

The closure of the deal is primarily subject to approval of Platinum's shareholders and customary regulatory approvals.

The offer price of $76.00 per share represents a 24 percent premium over Platinum's closing price of $61.27 on Friday.

As per the terms, Platinum shareholders will be entitled to elect to receive, for each Platinum share held, either $66.00 in cash, 0.6504 RenaissanceRe common shares or 0.2960 RenaissanceRe common shares and $35.96 in cash. Platinum shareholders will also receive a $10.00 per share special pre-closing dividend.

However, the election of shares will be subject to the issuance of exactly 7.5 million common shares of RenaissanceRe. Following closure of the deal, Platinum's existing shareholders will own about 16 percent of RenaissanceRe's outstanding shares.

The aggregate consideration will be about $761 million in RenaissanceRe common shares, and $1.16 billion of cash. RenaissanceRe said it will fund the cash consideration through a pre-closing dividend from Platinum, RenaissanceRe available funds and the proceeds from the issuance of new senior debt.

RenaissanceRe expects the deal to be accretive to book value per share and earnings per share. It also sees the combined company having substantial financial strength and flexibility after closure of the deal.

On a pro forma basis, the two companies had gross premiums written of $2.0 billion for the twelve months ended September 30, 2014. Shareholders equity increased to $4.5 billion from $3.7 billion as well as total cash and invested assets increased to $9.4 billion from $7.0 billion.

RenaissanceRe noted that Platinum is a company known well as it had supported its formation and initial public offering in 2002.

RenaissanceRe said its senior management team, led by Kevin O'Donnell and eleven member Board of Directors will remain in place, with the combined company also retaining its name and headquarters.

RNR closed Friday's regular trading session at $101.46, down $0.62 on a volume of 0.18 million shares, and PTP closed at $61.27, down $0.61 on a volume of 0.10 million shares.