On Thursday, Tower Group International, Ltd. (“Tower”) and ACP Re, Ltd. (“ACP Re”) announced that they have amended their Jan. 3, 2014 merger agreement, reducing the per-share consideration and breakup fee.

Specifically, the amendment:

  • Reduces the per-share consideration to be received by holders of Tower’s common shares in the merger from $3.00 per share to $2.50 per share.
  • Reduces the termination fee that Tower would, under certain circumstances, be required to pay to ACP Re in the event of a termination of the merger agreement.
  • Extends to Nov. 15, 2014 both the date by which Tower must hold its shareholders meeting to vote on the merger and the deadline for completing the merger before either party can terminate the merger agreement.
  • Excludes from the material adverse effect closing condition any continued adverse results of Tower’s operations or deterioration of its financial condition resulting from (a) losses and loss adjustment expenses incurred under new, renewal or in-force insurance and reinsurance related policies, insurance and reinsurance related contracts, and insurance and reinsurance related binders, (b) operating expenses, including acquisition expenses, associated with maintaining Tower’s agency relationships, employees and facilities to operate its business in the ordinary course or (c) the insufficiency of Tower’s loss reserves (including IBNR reserves).
  • Excludes from the material adverse effect closing condition any effect resulting from facts or circumstances disclosed in any of Tower’s previous SEC filings.
  • Eliminates the condition that holders of shares representing more than 15 percent of Tower’s share capital shall not have exercised dissenter’s rights.
  • Provides that the closing condition requiring that each of Tower’s U.S. insurance subsidiaries shall have risk-based capital that is equal to or exceeds its relevant company action level RBC will be satisfied if Tower and its subsidiaries together have enough capital so that capital could be reallocated among Tower’s insurance subsidiaries in order to satisfy the RBC condition.
  • Provides that all of Tower’s representations and warranties in the Merger Agreement will be qualified by disclosures made in Tower’s previous SEC filings.

Sources: ACP Re, Tower

Topics Mergers & Acquisitions