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Advent shares soar after Fairfax offer

Lloyd’s (re)insurer Advent Capital Holdings plc has seen its share price leap by six percent after confirming it has received a takeover bid from its largest shareholder, the Canadian combine Fairfax Financial Holdings Ltd.

The offer for 100 percent of Advent’s issued share capital valued the (re)insurer at 165p per share at the closing mid-market price of the company's shares on 28 July, Advent said.

But shares in the AIM listed firm leapt 6 percent to close at 175p – although this still represents a significant discount to Advent’s 240p net tangible assets value.

Fairfax, which already owns 45 percent of Advent, made the approach after the (re)insurer posted interim results yesterday that saw it climb back into the black after a loss-making first quarter. However, the takeover target – headed by founder Brian Caudle – pointed out that the offer is at a historic discount. According to Advent, its average closing share price in the previous month was 177p while for this year it has been 231p.

However, Advent has not rejected the offer outright and, in a statement to the Stock Exchange this afternoon, said it would give a “considered recommendation” as soon as is practicable.

“The board recognises that Fairfax, as a financial and strategic investor in the insurance industry, must act in what it sees as the best interests of its own shareholders but the board must be mindful of the real, longer term value of the Advent business and will consider all options available to the company,” Advent told investors.

If the deal goes ahead it will be the tenth Lloyd’s M&A transaction in just over a year and comes in the footsteps of Max Capital’s acquisition of Imagine Group’s Lloyd’s operations last week.

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