Watsa’s Fairfax to Acquire American Safety for $306 Milli

Fairfax Financial Holdings Ltd., the Canadian insurer led by Prem Watsa, agreed to buy American Safety Insurance Holdings Ltd. for $306 million in an all-cash deal.

American Safety shareholders will receive $29.25 per share, a 22 percent premium to the Bermuda-based insurer’s May 31 closing price, Toronto-based Fairfax said in a statement today. Tower Group International Ltd. will buy American Safety’s reinsurance unit from Fairfax for $59 million once the deal is completed, Bermuda-based Tower said today in a separate statement.

The acquisition gives Watsa $480 million of assets to invest, according to the statement. The 62-year-old chief executive officer has built the company through acquisitions, including the $300 million purchase of Brit Insurance Ltd., a London-based property-and-casualty insurer, in 2012 and a $34 million deal this year for Hartville Group Inc., a U.S. pet insurer.

“We expect to enhance our insurance operations in certain specialty lines of business with American Safety’s expertise,” Watsa said in the release.

American Safety gained 21 percent to $28.89 in New York trading, the most intraday since December 2008. Fairfax declined declined 0.2 percent to C$418 in Toronto.

The acquisition will be financed using internal resources and won’t require cash from the holding company, Fairfax said in the release. The deal is expected to be completed in the fourth quarter.

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