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Validus Lawsuit Against Transatlantic Holdings

Validus Lawsuit Against Transatlantic Holdings

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Published by DealBook
Lawsuit by Validus Holdings against Transatlantic Holdings in Delaware's court of chancery.
Lawsuit by Validus Holdings against Transatlantic Holdings in Delaware's court of chancery.

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Published by: DealBook on Aug 11, 2011
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08/18/2011

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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
VALIDUS HOLDINGS, LTD.,Plaintiff,v.TRANSATLANTIC HOLDINGS, INC.,STEPHEN P. BRADLEY, IAN H.CHIPPENDALE, JOHN G. FOOS, JOHN L.MCCARTHY, ROBERT F. ORLICH,RICHARD S. PRESS, MICHAEL C.SAPNAR, ALLIED WORLD ASSURANCECOMPANY HOLDINGS, AG andGO SUB, LLC,Defendants.::::::::::::::::C.A. No. _____-___ 
VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
Plaintiff Validus Holdings, Ltd. (“Validus”), by and through itsundersigned attorneys, as and for its complaint against Transatlantic Holdings, Inc.(“Transatlantic”), Stephen P. Bradley, Ian H. Chippendale, John G. Foos, John L.McCarthy, Robert F. Orlich, Richard S. Press, Michael C. Sapnar, Allied WorldAssurance Company Holdings, AG (“Allied World”), and GO Sub, LLC (“Merger Sub”)(defendants other than Transatlantic, Allied World and Merger Sub are collectivelyreferred to herein as the “Individual Defendants”), upon knowledge as to matters relatingto itself and upon information and belief as to all other matters, alleges as follows:
 
2
NATURE OF THE ACTION
1.
 
This is an action for declaratory, injunctive, and other relief to prevent theIndividual Defendants – who comprise the board of directors of Transatlantic (the“Transatlantic Board”) – from continuing to breach their fiduciary duties to the detrimentof Transatlantic and its stockholders. Aided and abetted by Allied World, the IndividualDefendants are pursuing an ill-conceived scheme to consummate the proposedacquisition of Transatlantic by Allied World (the “Proposed Allied World Takeover”) pursuant to an Agreement and Plan of Merger by and among Transatlantic, Allied Worldand Merger Sub (the “Merger Agreement”) and are thwarting the ability of theTransatlantic stockholders to take advantage of the proposed cash and stock offer of Validus.2.
 
On June 12, 2011, with no prior effort to explore alternatives, theIndividual Defendants caused Transatlantic to enter into the Merger Agreement. Sincethen, in flagrant breach of their fiduciary duties, the Individual Defendants have rejectedthe offer from Validus, a Bermuda exempted company offering a broad spectrum of reinsurance and insurance products, refused to change their recommendation toTransatlantic stockholders, refused to enter into discussions with Validus and adopted a poison pill and amended Transatlantic’s by-laws in an apparent effort to more easilymanipulate Transatlantic stockholder meetings. The offer from Validus has had a greater market value than the Proposed Allied World Takeover since its public announcement byValidus.
 
33.
 
On July 12, 2011, Validus delivered to Transatlantic a proposal letter for,and publicly announced, a merger transaction that would deliver to the Transatlanticstockholders a price as of the announcement of the offer of $55.95 per share, consistingof 1.5564 Validus voting common shares in the merger and $8.00 in cash per share pursuant to a one-time special dividend from Transatlantic immediately prior to closingof the merger (the “Validus Merger Offer”).4.
 
On July 19, 2011, the Individual Defendants rejected the Validus Merger Offer. Although the Validus Merger Offer represented a $6.04 or 12.1% premium, as of July 12, 2011 (and a $2.82 or 5.8% premium, as of July 19, 2011), over the market valueof the Proposed Allied World Takeover, the Individual Defendants claimed it “does notconstitute a superior proposal.”5.
 
However, also on July 19, 2011, the Individual Defendants “determinedthat the Validus proposal is reasonably likely to lead to a Superior Proposal [as definedunder the Merger Agreement] and that the failure to enter into discussions regarding theValidus proposal
would result in a breach of [their] fiduciary duties under applicablelaw
. As a result, the Board has determined to offer to engage in discussions andexchange information with Validus.” (emphasis added)6.
 
Despite admitting that entering into discussions with Validus would likelylead to a superior deal for the Transatlantic stockholders, and that a failure to do so would be a breach of their fiduciary duties, the Individual Defendants are still arbitrarilyrefusing to enter into discussions with Validus.

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