RenaissanceRe Holdings Ltd. (RNR) on Monday announced plans to buy Platinum Underwriters Holdings Ltd. (PTP) in a $1.9 billion cash and stock deal that would give the two Bermuda-based reinsurers added heft.
Terms of the deal call for Pembroke-based RenaissanceRe to pay $76 per share for Platinum, a premium of 24% to the target's Friday close. The consideration includes 7.5 million RenaissanceRe shares valued at $761 million at current prices and $1.16 billion in cash.
The cash consideration will be funded via a pre-close dividend by Platinum, as well as through RenaissanceRe available funds and proceeds from the issuance of new senior debt. At close Platinum shareholders will take both the $10 per share cash dividend and either $66 in cash, 0.6504 RenaissanceRe common shares or a combination of the two.
The combination would create a reinsurance company with $2 billion in gross premium written, $4.5 billion in shareholder equity and more than $9.4 billion in invested assets. RenaissanceRe said it expects to cut annual costs by about $30 million, creating a leaner entity better able to compete against well-funded rivals.
RenaissanceRe CEO Kevin J. O'Donnell in a statement said buying Platinum would "accelerate the growth of our U.S. specialty and casualty reinsurance platform" while creating a company with "very strong capital and liquidity position."
Post-deal RenaissanceRe's senior management team led by O'Donnell and its eleven member board will remain in place.
The deal comes just six weeks after Hamilton Insurance Group Ltd., a reinsurance firm backed by Sandy Weill, announced deals to acquire two businesses from Fairfax Financial Holdings Ltd.
Morgan Stanley & Co. LLC's Jared Abbey is acting as financial adviser to RenaissanceRe, with a Willkie Farr & Gallagher LLP team led by Robert Stebbins and Rajab Abbassi serving as legal counsel. Aditya Dutt, Mike Doak, Stephen Weinstein Andrew Markus and Gareth Bahlmann provided RenaissanceRE with in-house advice.
Wachtell, Lipton, Rosen & Katz's Gregory Ostling acted as legal counsel to RenaissanceRe's board.
Goldman, Sachs & Co.'s Victor Lopez-Balboa and Patrick Fels and Sullivan & Cromwell LLP's Stephen Kotran are advising Platinum.