IPC shareholders reject Max deal

By Lilla Zuill

NEW YORK (Reuters) - Shareholders of IPC Holdings Ltd (IPCR.O: Quote, Profile, Research) rejected a tie-up with rival insurance company Max Capital Group Ltd (MXGL.O: Quote, Profile, Research) on Friday, and IPC said it was reviewing alternatives, including a sale to a hostile bidder.

"We have heard the message sent by IPC shareholders regarding the Max transaction," IPC Chairman Kenneth Hammond said in a statement, noting that a majority of shareholders voted against the deal.

Validus Holdings Inc (VR.N: Quote, Profile, Research) made a rival offer for IPC in March and has worked for months to thwart the IPC-Max deal. All three insurance companies are based in Bermuda.

Max said that in light of the IPC vote, it had dropped its agreement with IPC, a deal that had the approval of the boards of both companies.

"The board, employees and shareholders of Max were excited about the deal with IPC and we are, of course, disappointed that IPC's shareholders did not approve it," Max Chief Executive Marston Becker said in a statement.

Max ruled out a higher offer for IPC.

Max's all-stock offer for IPC was valued at $912 million when it was unveiled on March 2. The bid was sweetened earlier this month with the promise to pay two special cash dividends totaling $2.50 per IPC share after the merger closed. Max shareholders were to receive one of the dividends, worth $1 a share.

Validus initially offered $1.68 billion for IPC on March 31 and has raised its offer twice since. On June 8 it offered $1.72 billion in stock and cash.