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Fairfax Financial Holdings to buy Brit plc for $1.88 billion

Staff writer |
Fairfax Financial Holdings has reached an agreement with Brit plc to acquire all of the outstanding shares of Brit. Brit is a market-leading global Lloyd's of London specialty insurer and reinsurer.

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Under the terms of Fairfax's offer for the Brit Shares, Brit shareholders will be entitled to receive 305 pence in cash per Brit Share, inclusive of any final dividend for the year ended December 31, 2014.

Fairfax has received hard irrevocable undertakings to accept the Offer at the Brit Offer Price from entities managed by Apollo and CVC in respect of, in the aggregate, a total of approximately 294 million Brit Shares representing approximately 73% of Brit's issued share capital.

These entities have undertaken to accept the Offer following the posting of the Offer document.

The Brit Offer Price represents a premium of 11.2% to the closing price of 274.2 pence per Brit Share on February 16, 2015, being the last full business day prior to this announcement. The aggregate purchase price payable by Fairfax for the Offer is approximately US$1.88 billion.

On February 12, 2015, Fairfax announced 2014 earnings of approximately US$1.6 billion. Excluding the final dividend expected to be declared by the board of directors of Brit for the year ended December 31, 2014 in an amount of 25 pence per Brit Share , Fairfax's purchase price of 280 pence per Brit Share is less than ten times the company's earnings based on the company's annualized net earnings for the six months ended June 30, 2014.

The acquisition is accretive to Fairfax on several metrics including gross revenue per share and investments per share. Fairfax has built a strong relationship with the Brit team and an understanding of their business and operations since the acquisition of Brit's runoff business in June, 2012.

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