Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Aspen Insurance Holdings (NYSE:AHL), a global insurance and reinsurance company specializing in commercial and environment liability, as well as casualty insurance, jumped by as much as 19% after receiving an unsolicited takeover offer from Endurance Specialty Holdings (NYSE:ENH).
So what: Under the terms of the offer, Endurance was willing to acquire Aspen for $47.50 per share in a mixed 60% stock and 40% cash deal valuing the company at $3.2 billion (a 21% premium to its close on Friday). Endurance believed acquiring Aspen would be immediately accretive to EPS and contribute to $100 million in annual cost savings. However, Aspen's board of directors rejected Endurance's proposal with Glyn Jones, chairman of the board, noting that the deal was "not in the best interests or Aspen or its shareholders. Endurance's ill-conceived proposal undervalues our company, represents a strategic mismatch, carries significant execution risk, and would result in substantial dis-synergies."
Now what: Tell us how you really feel, Glyn! It's pretty evident that there isn't a price that Endurance can put on Aspen Insurance that's going to sway the board toward accepting a buyout. But that may not stop another suitor from stepping up to the plate or for Endurance to attempt a hostile takeover of Aspen and take its offer directly to shareholders. This is a situation that investors would be wise to keep their eyes on. However, it's rarely prudent to chase a stock higher solely on the premise of buyout rumors. With that being said, I'm going to watch the festivities play out from the sidelines.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool recommends Endurance Specialty. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.