XL Offers To Buy Catlin For $3.9 Bln. - Update

(RTTNews) - Irish reinsurer XL Group Plc (XL), on Wednesday offered to buy Catlin Group Ltd (CGL.L), in a cash and stock deal currently valued at about 2.5 billion pounds ($3.9 billion).

XL, based in Dublin, Ireland, would pay 410 pence in cash and 0.130 XL share for each Catlin common share. Based on Tuesday's closing price, the XL offer values each Catlin share at 699 pence each.

Following the announcement, shares of Bermuda-based Catlin jumped about 11 percent on the London Stock Exchange.

Commenting on the offer, XL CEO Mike McGavick said a combination would make the companies stronger and accelerate their strategies.

"Specifically, the combined entity would be a leader in the global specialty and property cat markets and would make greater and more efficient use of both companies' global networks and infrastructure," McGavick said,

Under McGavick, XL has been revamping itself, exited a life reinsurance business in June, and recently agreed to sell a stake in a home insurer to Progressive Corp.

Catlin, founded by CEO Stephen Catlin in 1984, employs almost 2,500 people in more than 25 countries.

Catlin said that under the terms of the possible XL offer, its shareholders would not receive a final dividend for the year ended December 31, 2014.

Catlin also said it is in advanced talks over the sale of its interest in Box Innovation Group Ltd. In the event a sale is agreed on terms which generate surplus capital, any distribution of that surplus to Catlin shareholders would be in addition to the indicative terms of the possible offer, the company said.

XL is trading at $33.29, down $1.72 or 4.91%, on a volume of 3.9 million shares on the NYSE.

CGL.L is trading at 644.50 pence, up 62.50 pence or 10.74%, on a volume of 5.5 million shares on the LSE.