TORONTO and SOUTHFIELD, Mich., Oct.
28 /PRNewswire-FirstCall/ -- Fairfax Financial Holdings
Limited (TSX: FFH and FFH.U) and First Mercury Financial
Corporation (NYSE: FMR) today announced that Fairfax and First
Mercury have entered into a merger agreement pursuant to which
Fairfax will acquire all of the outstanding shares of First Mercury
common stock. First Mercury stockholders will receive
$16.50 per share in cash,
representing an aggregate transaction value of approximately
$294 million. The price
represents a premium of 45.2% to the closing price of First Mercury
common stock on October 28, 2010, the
day of this announcement, and a 67.3% premium to the closing price
30 days prior to the announcement of this transaction. The
transaction is expected to close in the first quarter of 2011.
The board of directors of First Mercury, after unanimously
determining that the merger is in the best interest of First
Mercury and its stockholders, unanimously approved the merger
agreement and resolved to recommend that First Mercury's
stockholders vote to approve the merger. Richard H. Smith,
the Chairman, President and Chief Executive Officer of First
Mercury, and Chairman Emeritus Jerome M.
Shaw, a director and the founder of First Mercury, who
together beneficially own approximately 17% of the outstanding
shares of First Mercury common stock, have agreed to vote their
shares in favor of the merger.
The transaction is subject to customary conditions, including
approval by First Mercury's stockholders and regulatory approvals.
There is no financing condition to consummate the
transaction. Following the completion of the acquisition,
Fairfax expects to continue to hold more than $1.0 billion in cash and marketable securities at
the holding company level.
Prem Watsa, Chairman and Chief
Executive Officer of Fairfax, said: "We are very pleased to
announce this transaction and are excited to have First Mercury and
its Chairman, President and Chief Executive Officer, Richard Smith join the Fairfax family. The
acquisition of First Mercury provides Fairfax with a
well-established surplus lines and specialty platform with a strong
track record. Operating in tandem with Crum & Forster led
by Doug Libby, Richard Smith and his team at First Mercury will
add considerable expertise in numerous market niches. Mr.
Watsa added, "We look forward to Richard's excellent stewardship of
First Mercury's business in the future."
Richard H. Smith, First Mercury's
Chairman, President and Chief Executive Officer, stated: "We
believe the transaction provides compelling value for our
shareholders. I want to express my gratitude to our
employees, management, directors and business partners for their
role in building a very successful underwriting company comprised
of specialty niche businesses. We look forward to expanding
our specialty operations as part of the Fairfax group of companies.
I am pleased to join the Fairfax organization and believe
Fairfax's expertise and resources will enable us to achieve
continued and even greater success."
BofA Merrill Lynch is acting as exclusive financial advisor to
First Mercury and McDermott Will
& Emery is acting as legal counsel to First Mercury.
Shearman & Sterling LLP is acting as legal counsel to
Fairfax.
First Mercury Conference Call Cancelled
First Mercury also announced today that its quarterly conference
call, originally scheduled for November 3,
2010 at 11:00 a.m., Eastern
Time, has been cancelled.
Background
Fairfax is a financial services holding company which, through
its subsidiaries, is engaged in property and casualty insurance and
reinsurance and investment management.
First Mercury provides insurance products and services primarily
to the specialty commercial insurance markets, focusing on niche
and underserved segments. During the Company's 37 years of
underwriting risks, First Mercury has developed the underwriting
expertise and cost-efficient infrastructure which has enabled us to
effectively underwrite such risks.
Forward-looking Statements
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 First
Mercury 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 timing and completion of the merger, the outcome of any
legal proceedings relating to the merger, the effect of the
announcement on First Mercury'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 reports filed with the SEC and securities regulatory
authorities in Canada, which are
available at www.sec.gov and www.sedar.com, and in First Mercury's
reports, including its Annual Report on Form 10-K for the year
ended December 31, 2009, filed with
the SEC, which are available at www.sec.gov. Fairfax and
First Mercury disclaim any intention or obligation to update or
revise any forward- looking statements, except as required by
law.
Additional Information
In connection with the proposed transaction, First Mercury will
file a proxy statement with the Securities and Exchange Commission
("SEC"). INVESTORS AND STOCKHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE MERGER AND THE PARTIES THERETO.
Investors and stockholders may obtain free copies of the proxy
statement and other documents filed by First Mercury (when
available), at the SEC's Web site at www.sec.gov or at First
Mercury's Web site at www.firstmercury.com. The proxy
statement and such other documents may also be obtained, when
available, for free from First Mercury by directing such request to
First Mercury Financial Corporation, 29110 Inkster Road,
Suite 100, Southfield,
Michigan 48034, Attn: Corporate Financial Reporting,
telephone: (800) 762-6837.
First Mercury and its directors, executive officers and other
members of its management and employees may be deemed to be
participants in the solicitation of proxies from First Mercury's
stockholders in connection with the proposed transaction.
Information concerning the interests of those persons is set
forth in First Mercury's proxy statement relating to the 2010
annual stockholder meeting and annual report on Form 10-K for the
fiscal year ended December 31, 2009,
both filed with the SEC, and will also be set forth in the proxy
statement relating to the transaction when it becomes
available.
SOURCE First Mercury Financial Corporation
Copyright . 28 PR Newswire