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Marshfield Associates, which currently has management and control over approximately 2.7 million shares representing the largest block held by US-based Odyssey Re's minority stockholders, has agreed to tender the shares over which it has control to Fairfax's $65 per share offer.
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addition to customary conditions, the offer will be irrevocably subject to there having been validly tendered and not withdrawn a majority of the outstanding Odyssey Re shares that are held by stockholders that are not affiliated with Odyssey Re (including Fairfax and its subsidiaries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 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 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.
Bank of America Merrill Lynch will be the dealer manager for the tender offer. Bank of America Merrill Lynch is also serving as Fairfax's financial advisor, and Shearman & Sterling and Torys are serving as Fairfax's legal counsel.
Sandler O'Neill & Partners is serving as the Odyssey Re special committee's financial advisor and Simpson Thacher & Bartlett is serving as that committee's legal counsel.
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. 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."
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