RICHMOND, Va. -- The insurance company Markel is buying Alterra Capital in a cash-and-stock deal worth nearly $3 billion
Markel Vice Chairman Steven Markel said Wednesday that Alterra's reinsurance and large account insurance portfolios will help to diversify the company.
Alterra Capital Holdings Ltd. stockholders will receive $10 per share and will have the right to receive 0.04315 Markel common shares for each Alterra share they own. Markel said that this will give Alterra stockholders $31 per share, which is a 34 percent premium to the company's Tuesday closing price of $23.15. Alterra currently has about 96 million outstanding shares, according to FactSet.
The companies value the transaction at about $3.13 billion.
Alterra's stock hit a new 52-week high of $29.59.
Shares of Markel fell $23.96, or 4.9 percent, to $462.09.
Markel stockholders will own approximately 69 percent of the combined company, with Alterra shareholders owning the remaining 31 percent.
Once the transaction is complete, Alterra's board will chose two individuals to be added to Markel Corp.'s board. Alterra President and CEO W. Marston Becker is expected to leave the company after the deal is completed.
The buyout, which still needs shareholder approval, is expected to close during the first half of next year.