Arch Capital had raised its offering from the previous deal of $622m to $700m, representing nearly 96% of Watford’s closing of shares in September

Arch Capital

Arch Capital revises transaction value of Watford. (Credit: Pixabay/Capri23auto.)

Arch Capital Group, a Bermuda-based insurance underwriter, has announced the revision of its deal to acquire Watford, a property and casualty (P&C) insurance and reinsurance firm, at a price of $35 per share or nearly $700m for the total transaction.

The revised value is claimed to represent nearly 96% of Watford’s closing common shares in this September.

The revision represents a 12.5% increase compared to Arch Capital’s prior agreement with Watford, which was made early last month. The enterprise value of the deal was $622m, with each share value of $31.

Arch Capital has also announced that it will assign its stake and obligations in Watford to a newly formed company in which it will own 40% of the stake and the funds managed by Warburg Pincus and Kelso & Company will each own 30% of the stakes.

Watford to operate as a standalone business

After the deal, which is expected to close in the first quarter of next year, Watford will continue to operate as a standalone business, while it will remain consolidated within Arch’s financials.

Though the deal has been approved by the board of directors of Watford, it still requires approval by Watford’s shareholders.

Arch Capital Group president and CEO Marc Grandisson said: “We continue to believe in the merits of this compelling opportunity and are pleased to be making this revised offer.

“The increased premium and the addition of Warburg Pincus and Kelso as active investment partners will position Watford to capitalize on its significant value generation potential while ensuring continuity of service for all policyholders.”

Watford president and CEO Jon Levy said: “This transaction delivers an attractive premium to our shareholders, and offers Watford the opportunity to fulfill its potential as a private company. This is a significant milestone for us, both in our pursuit of shareholder value as well as for our strategic growth plans.

“We look forward to deepening our longtime relationship with Arch, and collaborating with our new partners, Kelso and Warburg Pincus.”