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Validus Takes Over IPC

Validus shareholders will own approximately 62%, with IPC shareholders owning the remaining 38%

The boards of directors of Validus Holdings (Validus) and IPC Holdings (IPC) have approved an amalgamation agreement, that would create a Bermuda carrier in the short-tail reinsurance and insurance market.

As per the agreement, IPC shareholders will receive $7.50 in cash and 0.9727 Validus voting for each IPC common share. The Validus consideration provides IPC shareholders with a 24.9% premium and $31.73 per share, based on IPC’s and Validus’ closing stock prices on March 30, 2009.

The company stated that Aquiline Capital Partners, Vestar Capital Partners, and New Mountain Capital (which collectively owned approximately 38% of Validus’ outstanding voting common shares) have agreed to vote in favor of the issuance of Validus shares in connection with the transaction.

The combined entity would have $3.4 billion in GAAP shareholders’ equity, strong balance sheet and conservative investment portfolio. It would also have diversification into multiple short-tail lines, strong relationships with major reinsurance brokers, and an experienced and stable management team, said the company.

Upon closing of the transaction, Validus shareholders will own approximately 62% of the combined company on a fully diluted basis, with IPC shareholders owning approximately 38%.

Validus has terminated its efforts in connection with its other previously announced alternative steps to complete a transaction with IPC.