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Watsa explains Zenith deal to Reactions
26 February 2010
Fairfax's acquisition of Californian workers' compensation insurer Zenith National Insurance in a $1.4bn deal is a long-term play and the firm does not expect great results in the short term, Prem Watsa, chairman and CEO of Fairfax, told Reactions in an exclusive interview.
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Canadian insurance firm Fairfax's acquisition of Californian workers' compensation insurer Zenith National Insurance in a $1.4bn deal is a long-term play and the firm does not expect great results in the short term, Prem Watsa, chairman and CEO of Fairfax, told Reactions in an exclusive interview.
Fairfax announced last week that it will buy the shares of Zenith that it does not already own for $38 a share. This represents a 31.4% premium over the closing price of Zenith shares on February 17 2009, the day before the deal was announced, and values the deal at about $1.4bn. The deal represents a 34.5% premium to Zenith's book value at the end of last year.
The acquisition is similar to other deals Fairfax has done recently in that it is very familiar with the firm. Fairfax owned almost 40% of Zenith between 1998 and 2006 and Watsa...
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