OMERS will invest $1 billion to support Fairfax Financial Holdings Limited’s acquisition of insurer Allied World. According to terms of the deal, OMERS will indirectly acquire an approximate 21 percent stake in Allied World as a result of the transaction.
TORONTO, ONTARIO–(Marketwired – Jan. 27, 2017) – Fairfax Financial Holdings Limited (“Fairfax”) (TSX:FFH)(TSX:FFH.U) and OMERS, the pension plan for Ontario’s municipal employees, are pleased to announce that they have entered into an agreement pursuant to which OMERS will invest US$1 billion in order to indirectly acquire approximately 21% of the issued and outstanding shares of Allied World Assurance Company Holdings, AG (“Allied World”), simultaneously with the previously announced acquisition of Allied World by Fairfax and subject to certain regulatory approvals.
On December 18, 2016, Fairfax and Allied World announced that they had entered into a definitive merger agreement pursuant to which Fairfax will make an offer to Allied World shareholders to acquire all of the outstanding registered ordinary shares of Allied World. The transaction remains subject to a number of regulatory approvals and certain Allied World shareholder approvals. Closing of the transaction is expected to occur in the second quarter of 2017.
Fairfax is in ongoing discussions with several additional third parties to participate in the Allied World investment. Any such additional parties will be announced if and as negotiations are satisfactorily concluded.
“We are pleased to be investing in Allied World. Allied World is a market leading global property, casualty and specialty insurer and reinsurer, and is highly complementary to Fairfax’s existing worldwide operations,” said Sharon Ludlow, Head of Insurance Investments at OMERS. “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.”
“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.”
Fairfax is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.
Founded in 1962, OMERS is one of Canada’s largest defined benefit pension plans, with more than $77 billion in net assets as at December 31, 2015. It invests and administers pensions for 461,000 members from municipalities, school boards, emergency services and local agencies across Ontario. OMERS has employees in Toronto and other major cities across North America, the U.K., Europe and Australia — originating and managing a diversified portfolio of investments in public markets, private equity, infrastructure and real estate. For more information, please visit www.omers.com.