The transaction is expected to create an attractive return profile with earnings per share and return on equity accretion in 2016, the first full year of combined operation, and double-digit earnings per share accretion in 2017 upon full phase-in of expected synergies. XL expects to issue approximately $1.8 billion of new XL shares in connection with the acquisition. To satisfy the U.K. market practice of transactions being "funds certain," XL has put in place a bridge facility to backstop the funding of the cash elements of the consideration.
It is expected that the combined entity will be able to achieve annual cost synergies of at least $200 million, with the full level of these recurring synergies being achieved by the end of 2017. The primary sources of these cost synergies are expected through the consolidation of the combined infrastructure related to technology, real estate, and operational overlap as well as the consolidation of business and central support functions. It is expected that the realization of these cost synergies will result in one-time integration costs of approximately $250 million which are all anticipated to be incurred by the end of 2017.[1]
Conference Call and Webcast Information
A conference call to discuss the transaction will be held at 8:00 a.m. Eastern Time on Friday, January 9, 2015. The conference call can be accessed through a listen-only dial-in number or through a live webcast. To listen to the conference call, please dial (517) 308-9086 or (888) 673-9805: Passcode: "XL GLOBAL". For UK callers, please dial 44-20-7108-6248 or 0800-279-3953: Passcode: "XL GLOBAL". The webcast will be available at http://www.XLGroup.com and will be archived on XL's website from approximately 10:30 a.m. Eastern Time on Friday, January 9, 2015, through midnight Eastern Time on Monday, February 9, 2015. A telephone replay of the conference call will also be available beginning at approximately 10:30 a.m. Eastern Time on Friday, January 9, 2015, until midnight Eastern Time on Monday, February 9, 2015, by dialing 888-568-0151 or 203-369-3462.
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1. We are applying the Code but this is not pursuant to the Code or for the purposes of Rule 28. The basis of belief, principal assumptions and related reports in respect of any "quantified financial benefits statement" or statement on synergies is set out in the offer announcement published on 9 January 2015.
Website
A slide presentation and other information regarding the additional information regarding the transaction will be available on http://xl.transactionannouncement.com.
Advisors
Morgan Stanley and Goldman Sachs served as financial advisors to XL, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor. JP Morgan Chase, Barclays and Evercore served as financial advisors to Catlin, and Slaughter & May served as its legal advisor.
About XL
XL Group plc , through its subsidiaries, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies, and other enterprises throughout the world. XL is the company clients look to for answers to their most complex risks and to help move their world forward. To learn more, visit http://www.XLgroup.com. Neither the contents of XL's website, nor the contents of any other website accessible from hyperlinks on such website, is incorporated herein or forms part of this document.
About Catlin
Catlin Group Limited is a global P&C insurer and reinsurer with six underwriting hubs in London, Bermuda, the United States, Asia Pacific, Europe, and Canada. Domiciled in Bermuda and listed on the London Stock Exchange, Catlin has owned and managed the largest Lloyd's syndicate since 2000. It has a network of offices in more than 50 cities and offers access to local underwriting expertise with more than 2,300 employees in 25 countries. Catlin shares are traded on the London Stock Exchange . More information about Catlin can be found at http://www.Catlin.com [http://www.castle.com ]. Neither the contents of XL's website, nor the contents of any other website accessible from hyperlinks on such website, is incorporated herein or forms part of this document.
IMPORTANT INFORMATION
The information in this press release is provided for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, shares of XL or Catlin. Further to the announcement by XL of its offer to acquire the entire issued and to be issued share capital of Catlin (the "Offer"), (i) such Offer will be made pursuant to the terms of a circular to be issued by Catlin to its shareholders in due course setting out the terms and conditions of the Offer, including details of how to vote in respect of the Offer ("Circular"), and (ii) XL will in due course publish a prospectus for the purposes of EU Directive 2003/71/EC (together with any applicable implementing measures in any Member State, the "Prospectus Directive") in relation to shares which will be issued by it in connection with the Offer ("Prospectus"). Any decision in respect of, or in response to, the Offer should be made only on the basis of the information in the Circular and the Prospectus. Investors are advised to read the Circular and the Prospectus carefully.
This document is an advertisement and not a prospectus for the purposes of the Prospectus Directive. Accordingly, investors should not subscribe for, or purchase, any securities referred to in this document except on the basis of the information to be contained in the Prospectus, when published, which will be prepared in accordance with the Prospectus Directive. Copies of the Prospectus, when published, will be available from XL's website at http://www.XLgroup.com.
No statement in this document is intended as a profit forecast or estimate of the future financial performance of XL, Catlin or the combined group following completion of the Offer for any period unless otherwise stated. Furthermore, no statement in this document should be interpreted to mean that: (i) earnings or earnings per share for Catlin for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Catlin; or (ii) earnings or earnings per share for XL for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for XL.
Certain information included in this press release has been sourced from third parties. XL does not make any representations regarding the accuracy, completeness or timeliness of such third party information. Permission to cite such information has neither been sought nor obtained.
Forward Looking Statements
This press release contains forward-looking statements, both with respect to XL and Catlin and their industries, that reflect their current views with respect to future events and financial performance. Statements that are not historical facts, including statements about XL's or Catlin's beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations, all of which involve risk and uncertainty. Statements that include the words "expect," "intend," "plan," "believe," "project," "anticipate," "may," "could" or "would" or similar statements of a future or forward-looking nature identify forward-looking statements. Actual results may differ materially from those included in such forward-looking statements and therefore you should not place undue reliance on them.
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