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Monday 18 October 2010
Author: Russell Group

The battle lines look to have been drawn between Hardy Underwriting and theBeazley Group after the Hardy board dismissed an offer from Beazley to acquire the group.

Beazley announced it had made an offer of 300 pence per share for the entire capital of Bermuda-based Hardy which has been dismissed and branded as “opportunistic” by the Hardy board.

In a statement Beazley said: “Beazley plc announces that it made an indicative proposal on 6 October 2010 to the board of Hardy regarding a possible offer for the entire issued and to be issued share capital of Hardy.

“The proposal indicated a possible offer for the entire issued and to be issued share capital of Hardy of 300 pence per share in cash, funded from Beazley’s existing internal resources.”

It added: “The proposal represents a 36 percent premium to the closing Hardy share price on 5 October 2010, being the last day prior to the submission of the proposal to the board of Hardy. A 34 percent premium to the volume-weighted average Hardy share price over the three months prior to the submission of the Proposal to the board of Hardy; and multiple of over 1.2 times Hardy’s 30 June 2010 fully diluted net tangible assets per share.”

The group added: “Beazley believes that the two groups are highly compatible. Both have well-regarded underwriting teams, renowned track records of profitability and a shared objective to develop a diverse speciality insurance franchise.”

However Hardy hit back stating: “The indicative, non-binding proposal substantially undervalues the company and does not reflect its; strong historic underwriting track record; clearly stated and successful growth strategy of prudent diversification and the pursuit of selective opportunities that lever its niche skills in complementary sectors and geographies.”

The statement added: “The board views the proposal as an attempt to acquire the company opportunistically, when valuations of listed Lloyd's companies are at a cyclical low and to exploit the impact on Hardy of a series of exceptional international property treaty losses

“The board, having carefully considered the proposal together with its advisers Rothschild and KBC Peel Hunt, was of the unanimous opinion that it significantly undervalues the company and consequently had no hesitation in rejecting the proposal.”

Beazley responded by stating: “On 11 October 2010, Beazley received a letter from the board of Hardy, dated 8 October 2010, rejecting the proposal.Beazley is surprised and disappointed by the board of Hardy’s outright rejection of its proposal.

“Beazley remains committed to establishing a constructive dialogue with Hardy’s board and shareholders with the intention of agreeing a recommended transaction. To this end, Beazley is announcing the proposal as a means of advancing that process.”

It added there was no certainty that the group would return with an increased offer.