Endurance Specialty Holdings Ltd. may want to buy Bermuda reinsurance rival Aspen Insurance Holdings Ltd., but its acquisition target is doing everything it can to resist the hostile bid. In its latest move, Aspen wrote its shareholders, urging them to reject the company’s second, higher offer and added efforts to seal an M&A deal.

There’s plenty of blunt language involved. In the June 27 letter, for example, Aspen urges its shareholders to reject Endurance’s bid to buy the company “on highly unattractive terms.”

“Endurance’s proposals ostensibly relate to the calling of a special meeting and to support a convoluted legal strategy Endurance has said it will pursue with the Bermuda Supreme Court,” the company wrote to its shareholders. “Do not be misled. These coercive legal tactics are attempts by Endurance to acquire Aspen at the lowest possible price.”

Endurance is also pursuing an unsolicited exchange offer for Aspen’s shares, something that Aspen’s Board of Directors already rejected outright more than a week ago.

Aspen told its shareholders in the June 27 letter “Endurance is desperately pursuing these tactics because time is not on its side,” while “Aspen’s business continues to strengthen.” The company also asserted that Endurance’s revised offer “is worth even less than its initial offer based on the increase in Aspen’s book value and decrease in Endurance’s stock price since its initial proposal.”

In short, Aspen tells its shareholders they should “reject Endurance’s coercive tactics to force through its inadequate offer.”

Why is the offer inadequate? Endurance earlier in June upped its initial April offer by $2 to $49.50 per share, or $3.2 billion for all of Aspen, paid for by a combination of cash and Endurance common shares. Aspen argued in its shareholder letter that the offer price is bogus, and actually worth only $47.64 per Aspen share based on the market close on June 26. Even worse, Aspen said, an all-stock election would be worth only $46.40 per Aspen share.

Aspen told its shareholders in the letter that the company should remain independent because its strategic investments in its business are paying off, and that it is on track to reach a 10 percent operating return-on-equity objective in 2014.

“Aspen is successfully executing on a strategic plan and we are confident that it will deliver superior value to Aspen shareholders,” the shareholder letter stated.

Endurance’s Side

Aspen shareholders will have much to consider.

Aspen’s June 27 letter, signed by Aspen Chairman Glyn Jones and Chief Executive Officer Chris O’Kane, counters a letter that Endurance sent to the shareholders on June 18, urging them to vote to authorize two actions:

• One that would convene a special meeting of Aspen shareholders vote on an increase in the size of the Aspen board of directors—from 12 to 19 members.
• Another supporting a proposed “Scheme of Arrangement” by Endurance. Essentially, voting for this authorization means that a court-ordered meeting will be held during which Aspen shareholders may directly consider Endurance’s acquisition proposal.

“You now have the opportunity to take concrete action towards realizing the value presented by Endurance’s proposal and to send an unequivocal message to the Aspen board of directors,” the June 18 letter signed by Endurance’s chairman and CEO John Charman said, delivering that message all in bold print upper-case letters for emphasis.

The June 18 letter reviewed potential benefits of the deal that Endurance has set forth in prior announcements—its calculations of deal premiums and future value drivers related to increased scale transaction synergies and diversification.

Following Aspen’s June 27 letter, Endurance followed with another letter to Aspen shareholders, again urging them to authorize the special meeting and Scheme of Arrangement—and to make their voices heard on certain issues regarding Aspen’s “strategic direction and corporate governance.”

The letter includes a table contrasting Aspen and Endurance on items such shareholder alignment (through comparative management ownership stakes), profit performance, and the shareholder-friendliness of governance structures (highlighting Aspen’s adoption of a poison pill, among other items).

“Does your voice—the voice of true owners of Aspen—deserve to be heard on a question as important as the proposal by Endurance,” the letter asks, asserting that the answer should be yes and that votes on the two authorizations are needed by a July 25, 2014 target date that Endurance has set.

(Additional reporting by Susanne Sclafane)