Fairfax confirms $1 billion investment for Allied World takeover

Company admits that additional third parties negotiations are also taking place

Fairfax confirms $1 billion investment for Allied World takeover

Insurance News

By Paul Lucas

It’s been rumoured for weeks (we first talked about the story here) and now it’s official – Fairfax Financial Holdings will pick up a huge investment from OMERS as part of its Allied World takeover.

In a statement issued this morning, Fairfax confirmed that an agreement had been reached that will see OMERS pour in US$1 billion to indirectly acquire 21% of the outstanding shares of Allied World Assurance Company Holdings, subject to regulatory approval.

Learn more about acquisition insurance here.

The deal has been reached just over one month on from Fairfax and Allied World announcing a definitive merger agreement which is expected to officially close in the second quarter of 2017. Fairfax has admitted that in addition to the investment from OMERS it is also in ongoing discussions with several other third parties to participate in the deal.

“We are excited to be working again with OMERS,” said Prem Watsa, chairman and CEO of Fairfax. “OMERS is a proven, long-term investor and the commitment by it will allow us to increase the cash component of our US$54.00 per share offer to Allied World shareholders and gives us the flexibility to potentially buy back their interest over 5-7 years’ time.”
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Sharon Ludlow, head of insurance investments at OMERS, also expressed her enthusiasm for the deal.

“OMERS investment in Allied World is consistent with our strategy to invest in high-quality companies, with strong fundamentals and a track record of value creation,” she said.

Related stories:
Fairfax Financial in $4.9 billion takeover finance talks
Fairfax speaks out on $4.9 billion acquisition of Allied World

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