(Note: All dollar amounts in this press release are expressed in
U.S. dollars.)
Fairfax Financial Holdings Limited (TSX: FFH)(NYSE: FFH) and
Odyssey Re Holdings Corp. (NYSE: ORH) announced today that they
have signed a merger agreement pursuant to which Fairfax will, as
soon as practicable, commence a tender offer to acquire all of the
outstanding shares of common stock of Odyssey Re that Fairfax does
not currently own for $65 in cash per share, representing total
cash consideration of approximately $1.0 billion. The Board of
Directors of Odyssey Re, following the recommendation of the
Special Committee of Independent Directors of its Board formed to
review Fairfax's proposal, has unanimously resolved to recommend
that Odyssey Re's minority stockholders tender their shares in the
Fairfax offer. Marshfield Associates, Inc., which currently has
management and control over approximately 2.7 million shares
representing the largest block held by Odyssey Re's minority
stockholders, has agreed to tender the shares over which it has
control to Fairfax's $65 per share offer.
The price of $65 per share in cash represents a 29.8% premium
over the closing price on September 4, 2009 (the date on which
Fairfax publicly announced that it was proposing to acquire all
outstanding shares of common stock of Odyssey Re that Fairfax does
not currently own) and a 33.4% premium over the 30-day average
closing price for the period ending on September 4, 2009. Based on
Odyssey Re's initial public offering price of $18.00 per share in
June 2001, the purchase price represents a compounded annual return
of 17.3% through the date of the merger agreement.
Prem Watsa, Chairman and CEO of Fairfax, said: "We believe that
our increased offer price of $65 per share, which is well above any
price at which Odyssey Re shares have ever traded, represents a
very attractive price for Odyssey Re's minority stockholders. We
are very gratified that we have the recommendation of Odyssey Re's
Special Committee and look forward to working together to complete
the transaction." Mr. Watsa added, "Following the successful
completion of our offer, there will be no changes in Odyssey Re's
strategic or operating philosophy; under the excellent leadership
of Andy Barnard, President and CEO, Odyssey Re will continue to
operate its business exactly as it has always been run."
Andy Barnard, President and CEO of Odyssey Re said, "We look
forward to business as usual and continuing with our vision of
independent growth of our insurance and reinsurance platforms with
the ongoing support of Fairfax."
"The Special Committee of Independent Directors is very pleased
to have negotiated a transaction with Fairfax that we believe is
highly attractive and in the best interests of the minority
stockholders," said Patrick Kenny, Chairman of the Special
Committee of Odyssey Re. "I would like to thank the other members
of the Special Committee for their extensive commitment and
effective representation of Odyssey Re's minority stockholders, and
also to thank our financial and legal advisors."
As soon as is practicable Fairfax, through a wholly-owned
subsidiary, will commence a tender offer for all of the outstanding
shares of common stock of Odyssey Re that Fairfax does not
currently own, for $65 per share in cash. In addition to customary
conditions, the offer will be irrevocably subject to there having
been validly tendered and not withdrawn a majority of the
outstanding Odyssey Re shares that are held by stockholders that
are not affiliated with Odyssey Re (including Fairfax and its
subsidiaries and the directors and executive officers of each of
Odyssey Re and Fairfax). The offer will not be subject to a
financing condition. Promptly following the offer, Fairfax will
consummate a second-step merger in accordance with the merger
agreement pursuant to which, subject to limited exceptions,
non-tendering holders of Odyssey Re common stock would be entitled
to receive the price per share paid by Fairfax in the offer.
Following the purchase of shares in the tender offer and subsequent
merger, Odyssey Re would become an indirect subsidiary of
Fairfax.
Fairfax intends to use the $983.0 million net proceeds from its
previously completed public offering of its subordinate voting
shares, together with available cash on hand, to fully fund the
tender offer and subsequent merger. Following the successful
completion of the tender offer and subsequent merger, Fairfax
expects to continue to have in excess of $1 billion in cash and
marketable securities at the holding company level.
BofA Merrill Lynch will be the Dealer Manager for the tender
offer. BofA Merrill Lynch is also serving as Fairfax's financial
advisor, and Shearman & Sterling LLP and Torys LLP are serving
as Fairfax's legal counsel.
Sandler O'Neill & Partners, L.P. is serving as the Odyssey
Re Special Committee's financial advisor and Simpson Thacher &
Bartlett LLP is serving as that committee's legal counsel.
About Fairfax
Fairfax Financial Holdings Limited is a financial services
holding company which, through its subsidiaries, is engaged in
property and casualty insurance and reinsurance and investment
management.
About Odyssey Re
Odyssey Re Holdings Corp. is a leading worldwide underwriter of
property and casualty treaty and facultative reinsurance, as well
as specialty insurance. Odyssey Re operates through its
subsidiaries, Odyssey America Reinsurance Corporation, Hudson
Insurance Company, Hudson Specialty Insurance Company, Clearwater
Insurance Company, Newline Underwriting Management Limited, Newline
Asia Services Pte. Ltd., and Newline Insurance Company Limited. The
Company underwrites through offices in the United States, London,
Paris, Singapore, Toronto and Mexico City. Odyssey Re Holdings
Corp. is listed on the New York Stock Exchange under the symbol
"ORH".
Important Information
This announcement is for informational purposes only and does
not constitute an offer to purchase or a solicitation of an offer
to sell Odyssey Re common stock. Odyssey Re stockholders are
advised to read the Tender Offer Statement on Schedule TO, the
Offer to Purchase, Odyssey Re's Solicitation/Recommendation
Statement on Schedule 14D-9 and other documents relating to the
tender offer that will be filed with the SEC and securities
regulatory authorities in Canada because they will contain
important information. Anyone may obtain copies of these documents
when available for free at the SEC's website at www.sec.gov and at
the Canadian Securities Administrators' website at www.sedar.com,
or by calling Innisfree M&A Incorporated, the Information Agent
for the offer, at 1-888-750-5834.
This press release includes certain forward-looking statements.
Such forward-looking statements are subject to known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Fairfax or Odyssey Re to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the possibility
that the Fairfax offer could be withdrawn or not consummated, the
outcome of any legal proceedings that may be instituted against
Odyssey Re and/or others relating to the proposed transaction, the
effect of the announcement on Odyssey Re's customer relationships,
operating results and business generally. Such factors also
include, but are not limited to, the risks and uncertainties
described in Fairfax's most recently issued Annual Report, which is
available at www.fairfax.ca, in Fairfax's Base Shelf Prospectus
(under "Risk Factors") filed with the SEC and securities regulatory
authorities in Canada, which is available at www.sec.gov and
www.sedar.com, and in Odyssey Re's filings including its Annual
Report on Form 10-K for the year ended December 31, 2008, which
have been filed with the SEC and securities regulatory authorities
in Canada and are available at www.sec.gov and www.sedar.com.
Fairfax and Odyssey Re disclaim any intention or obligation to
update or revise any forward-looking statements, except as required
by law.
Contacts: Fairfax Financial Holdings Limited Greg Taylor, Chief
Financial Officer (416) 367-4941 Media Contact: Fairfax Financial
Holdings Limited Paul Rivett, Fairfax Chief Legal Officer (416)
367-4941 Odyssey Re R. Scott Donovan Chief Financial Officer (203)
977-0199
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