Washington, D.C. 20549

 

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FORM 8-K

 

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 2, 2017

 

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Bermuda		1-8993		94-2708455
(State or other jurisdiction		(Commission File Number)		(I.R.S. Employer
of incorporation)				Identification No.)

 

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On May 2, 2017, OneBeacon Insurance Group, Ltd. (“OneBeacon”), a non-wholly owned subsidiary of White Mountains Insurance Group, Ltd. (“White Mountains”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Intact Financial Corporation (“Intact”), Intact Bermuda Holdings Ltd., a wholly owned subsidiary of Intact (“Holdco”) and Intact Acquisition Co. Ltd., a direct wholly owned subsidiary of Holdco (“Merger Sub”).  The Merger Agreement provides for, subject to the satisfaction or waiver of specified conditions, the merger of Merger Sub with and into OneBeacon (the “Merger”), with OneBeacon surviving the Merger as a direct wholly owned subsidiary of Holdco and indirect wholly owned subsidiary of Intact.

At the effective time of the Merger, all of the common shares of OneBeacon owned by the WTM Shareholders (as defined below) will be automatically transferred to Holdco in exchange for the right to receive an amount in cash equal to $18.10, without interest. As of the date hereof, the WTM Shareholders collectively own 71,754,738 Class B common shares of OneBeacon.

On May 2, 2017, White Mountains issued a press release announcing the Merger Agreement and related matters. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

On May 2, 2017, in connection with the execution of the Merger Agreement, Lone Tree Holdings Ltd. and Bridge Holdings (Bermuda) Ltd., each a wholly owned subsidiary of White Mountains (collectively, the “WTM Shareholders”), entered into a voting agreement (the “Voting Agreement”) with Intact and White Mountains.  Pursuant to the Voting Agreement, the WTM Shareholders agreed, among other things, to vote or cause to be voted any issued and outstanding Class A and Class B common shares of OneBeacon (“OneBeacon Shares”) beneficially owned by them in favor of adopting the Merger Agreement, subject to certain exceptions.  In addition, White Mountains agreed to enter into, or cause its applicable subsidiary to enter into, a transition services agreement and an investment management agreement, forms of which are attached as exhibits to the Merger Agreement, at the closing of the Merger.

The Voting Agreement contains certain restrictions on the ability of the WTM Shareholders to transfer the OneBeacon Shares owned by them, to solicit third-party takeover proposals for OneBeacon and to enter into any arrangements with respect to the voting of the OneBeacon Shares.

The Voting Agreement will automatically terminate upon the earliest of (i) January 2, 2018 (which will be automatically extended to March 2, 2018 if on January 2, 2018, the only pending condition to the closing of the Merger is the condition related to regulatory approvals), (ii) the effective time of the Merger, (iii) the termination of the Merger Agreement, (iv) the entry without the prior written consent of the WTM Shareholders into any amendment or modification to the Merger Agreement that results in a decrease in the consideration payable to holders of Class B common shares of OneBeacon, a change in the type of consideration payable or otherwise causes a change that is materially adverse to the WTM Shareholders and (v) the mutual written agreement of the WTM Shareholders and Intact.

 

 

The foregoing summary of the Voting Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Voting Agreement, which is filed as Exhibit 10.1 hereto and incorporated by reference herein.

 

	WHITE MOUNTAINS INSURANCE GROUP, LTD.
	By:	/s/ J. Brian Palmer
		Name:	J. Brian Palmer
		Title:	Managing Director and Chief Accounting Officer
Date:  May 2, 2017

 

 

EXHIBIT INDEX

 

VOTING AGREEMENT

THIS VOTING AGREEMENT (this “Agreement”), dated as of May 2, 2017, among Intact Financial Corporation, a Canadian corporation (“Parent”), the Persons executing this Agreement as “Shareholders” on the signature page hereto (each a “Shareholder” and collectively, the “Shareholders”), and, solely for purposes of Section 5.11, White Mountains Insurance Group, Ltd. (“WTM”), a Bermuda exempted limited liability company.

WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, Intact Bermuda Holdings Ltd., a Bermuda exempted limited liability company and a wholly owned Subsidiary of Parent (“Holdco”), Intact Acquisition Co. Ltd., a Bermuda exempted limited liability company and a direct wholly owned Subsidiary of Holdco (“Merger Sub”), and OneBeacon Insurance Group, Ltd., a Bermuda exempted limited liability company (the “Company”), are entering into an Agreement and Plan of Merger (as the same may be amended or supplemented from time to time, the “Merger Agreement”), providing for, among other things, the merger of Merger Sub with and into the Company, with the Company surviving such merger (the “Merger”), so that immediately following the Merger, the Company will be a direct wholly owned Subsidiary of Holdco and an indirect wholly owned Subsidiary of Parent, on the terms and subject to the conditions set forth in the Merger Agreement;

WHEREAS, as of the date hereof, each Shareholder is the “beneficial owner” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”)) of and is entitled to dispose and vote the number of Class A common shares, par value $0.01 per share, of the Company (“Class A Shares”) and Class B common shares, par value $0.01 per share, of the Company (“Class B Shares” and, together with Class A Shares, “Company Shares”) set forth on Schedule A hereto (with respect to such Shareholder and until disposed of by such Shareholder in accordance with Section 4.02, the “Owned Shares” and, together with any additional Company Shares of which such Shareholder becomes the “beneficial owner” after the date hereof and during the term of this Agreement, the “Subject Shares”); and

WHEREAS, in connection with the execution and delivery of the Merger Agreement, Parent, each Shareholder and WTM desire to enter into this Agreement.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

 

any way the meaning or interpretation of this Agreement.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.  The words “hereof”, “herein”, “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The terms “or”, “any” and “either” are not exclusive.  The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  All terms defined in this Agreement shall have the defined meanings when used in any document made or delivered pursuant hereto unless otherwise defined therein.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  Unless otherwise specifically indicated, all references to “dollars” or “$” shall refer to the lawful money of the United States.  References to a Person are also to its permitted assigns and successors.

(b)       The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any provision of this Agreement.

ARTICLE II

 

Each Shareholder hereby represents and warrants, severally and not jointly, to Parent that:

disposition of the Owned Shares.  As of the date of this Agreement, except as contemplated by this Agreement, (i) there are no agreements or arrangements of any kind, contingent or otherwise, obligating such Shareholder to sell, transfer, pledge, assign, exchange, encumber or otherwise dispose of (collectively, “Transfer”) or cause to be Transferred any Owned Shares or otherwise relating to the Transfer of any Owned Shares and (ii) no Person has any contractual or other right or obligation to purchase or otherwise acquire any of such Owned Shares.

arbitration, action or, to the knowledge of the Shareholder, investigation against the Shareholder, that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the ability of the Shareholder to perform its obligations hereunder.  As of the date of this Agreement, there is no outstanding injunction, order, judgment, ruling, decree or writ imposed upon the Shareholder that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the ability of the Shareholder to perform its obligations hereunder.

ARTICLE III

 

Parent hereby represents and warrants to the Shareholders that:

ARTICLE IV

 

initiation, discussion, negotiation, facilitation, provision of information or execution of agreements, in each case to the extent related to any such Shareholder Parent Transaction (or potential Shareholder Parent Transaction), shall not be subject to the prohibitions and limitations set forth in Section 4.03.

ARTICLE V

 

If to Parent, to:

 

	Intact Financial Corporation 2020, boul. Robert-Bourassa, 6e étage Montréal, Québec  H3A 2A5
	Attention:	Frédéric Cotnoir
	Facsimile:	(514) 842-6958
	Email:	frederic.cotnoir@intact.net
	Attention:	Don Fox
	Facsimile:	(514) 842-6958
	Email:	don.fox@intact.net

 

 

with a copy (which shall not constitute notice) to:

 

If to the Shareholders or WTM, to:

 

	White Mountains Insurance Group, Ltd. 80 South Main Street Hanover, NH 03755
	Attention:	Robert Seelig, General Counsel
	Facsimile:	(603) 643-4592
	Email:	rseelig@whitemountains.com

 

with a copy (which shall not constitute notice) to:

 

and

 

5.05(a) shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto.  Each party hereto agrees that service of process upon such party in any Action arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 5.01 of this Agreement.  The parties hereto agree that a final judgment in any such Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, however, that nothing contained in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

an adequate remedy or that the parties otherwise have an adequate remedy at law.  The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 5.07 shall not be required to provide any bond or other security in connection with any such order or injunction.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first written above.

 

	INTACT FINANCIAL CORPORATION
	By:	/s/ Charles Brindamour
		Name:	Charles Brindamour
		Title:	Chief Executive Officer
	By:	/s/  Don Fox
		Name:	Don Fox
		Title:	Executive Vice President

 

 

Schedule A

 

 

 

Shareholder	Number of Class A Shares	Number of Class B Shares
LONE TREE HOLDINGS LTD.	0	57,327,289
BRIDGE HOLDINGS (BERMUDA) LTD.	0	14,427,449

 

 

PRESS RELEASE

White Mountains to Vote in Favor of Intact’s Acquisition of OneBeacon

HAMILTON, Bermuda, May 2, 2017 /PRNewswire/ -- White Mountains Insurance Group, Ltd. (NYSE: WTM) has entered into a definitive agreement to vote its shares of OneBeacon Insurance Group, Ltd. (“OneBeacon”) in favor of Intact Financial Corporation’s acquisition of 100% of OneBeacon for $18.10 per share in cash (the “Transaction”). White Mountains owns 75.7% of OneBeacon’s outstanding common shares, representing 96.9% of the voting power.

White Mountains expects to receive gross proceeds of $1.3 billion from the Transaction, which would increase its adjusted book value by approximately $107 per share.

The transaction is expected to close in the fourth quarter of 2017.  It is subject to regulatory approval and other customary closing conditions.

Cravath, Swaine & Moore LLP served as legal advisor to White Mountains and OneBeacon.

ADDITIONAL INFORMATION

White Mountains is a Bermuda-domiciled financial services holding company traded on the New York Stock Exchange and the Bermuda Stock Exchange under the symbol “WTM”. Additional financial information and other items of interest are available at the Company’s web site located at www.whitemountains.com.

 

 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  All statements, other than statements of historical facts, included or referenced in this press release which address activities, events or developments which White Mountains expects or anticipates will or may occur in the future are forward-looking statements.  The words “will”, “believe,” “intend,” “expect,” “anticipate,” “project,” “estimate,” “predict” and similar expressions are also intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to White Mountains:

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change in adjusted book value per share or return on equity;

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business strategy;

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financial and operating targets or plans;

·

incurred loss and loss adjustment expenses and the adequacy of its loss and loss adjustment expense reserves and related reinsurance;

·

projections of revenues, income (or loss), earnings (or loss) per share, dividends, market share or other financial forecasts;

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expansion and growth of its business and operations; and

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future capital expenditures.

These statements are based on certain assumptions and analyses made by White Mountains in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate in the circumstances.  However, whether actual results and developments will conform to its expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations, including:

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the risk that the Transaction may not be completed on the currently contemplated timeline;

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the possibility that any or all of the various conditions to the consummation of the Transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals);

·

the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement dated May 2, 2017, among OneBeacon, Intact Financial Corporation and the other parties thereto (the “Merger Agreement”), including in circumstances which would require OneBeacon to pay a termination fee or other expenses;

·

the risks related to diverting management’s attention from White Mountains’s or OneBeacon’s ongoing business operations and other risks related to the announcement or pendency of the Transaction, including on White Mountains’s or OneBeacon’s ability to retain and hire key personnel, their ability to maintain relationships with its customers, policyholders, brokers, service providers and others with whom they do business and their operating results and business generally;

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the risk that shareholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability;

 

 

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the risks that are described from time to time in White Mountains’s filings with the Securities and Exchange Commission , including but not limited to White Mountains’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed February 27, 2017 ;

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claims arising from catastrophic events, such as hurricanes, earthquakes, floods, fires, terrorist attacks or severe winter weather;

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the continued availability of capital and financing;

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general economic, market or business conditions;

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business opportunities (or lack thereof) that may be presented to it and pursued;

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competitive forces, including the conduct of other property and casualty insurers and reinsurers;

·

changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers;

·

an economic downturn or other economic conditions adversely affecting its financial position;

·

recorded loss reserves subsequently proving to have been inadequate;

·

actions taken by ratings agencies from time to time, such as financial strength or credit ratings downgrades or placing ratings on negative watch; and

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other factors, most of which are beyond White Mountains’s control.

 

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by White Mountains will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, White Mountains or its business or operations.  White Mountains assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise.

 

CONTACT:  Todd Pozefsky
Tel:  (203) 458-5807