Benzinga | Oct 19, 2020 05:11PM EDT

Watford Holdings Board of Directors Determines $34.50/Share Proposal from Enstar Group Limited Could Reasonably be Expected to Result in a "Superior Proposal"

Watford Holdings Ltd. (NASDAQ:WTRE) ("Watford" or the "Company") today announced its Board of Directors has determined, in its good faith judgment (after consultation with the Company's financial advisors and outside legal counsel), that the unsolicited, non-binding proposal from Enstar Group Limited (NASDAQ:ESGR) ("Enstar") to acquire the Company's common shares for $34.50 per share, subject to confirmatory diligence, could reasonably be expected to lead to a "Superior Proposal" as defined in the Company's merger agreement with Arch Capital Group Ltd. ("Arch") and that the failure to take such action would be inconsistent with the directors' exercise of their fiduciary duties under applicable law.

Under the merger agreement with Arch, the determination by the Company's Board allows the Company, subject to Enstar entering into an Acceptable Confidentiality Agreement (as defined in the merger agreement with Arch) with the Company, to provide information to and conduct discussions and negotiations with Enstar. The Company's Board has not determined that Enstar's proposal in fact constitutes a Superior Proposal under the current provisions of the merger agreement with Arch and has not changed its recommendation in support of the merger with Arch.

There can be no assurance that the discussions with Enstar will result in the Company's Board's determination that the Enstar proposal is a Superior Proposal or the consummation of a transaction that is superior to the pending transaction with Arch or that the terms of any new transaction will be the same as those reflected in Enstar's proposal.

As announced on October 9, 2020, the Company entered into a definitive merger agreement with Arch and Greysbridge Ltd., a wholly owned subsidiary of Arch ("Merger Sub"), pursuant to which, among other things and subject to certain conditions, (a) each issued and outstanding common share of the Company (other than (i) shares to be canceled pursuant to the merger agreement with Arch and (ii) restricted share units to be canceled and exchanged pursuant to the merger agreement with Arch), would be converted into the right to receive $31.10 in cash, without interest, (b) each issued and outstanding 8% Cumulative Redeemable Preference Share of the Company (the "Preference Shares") would remain outstanding as a preference share of the surviving company and would be entitled to the same dividend and other relative rights, preferences, limitations and restrictions as are now provided to the Preference Shares and (c) Merger Sub would merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Arch.

Advisors

Morgan Stanley is acting as financial advisor to Watford, and Clifford Chance US LLP is serving as Watford's legal advisor.