Recommended Cash Acquisition by Tokio Marine & Nichido Fire Insurance Co., Ltd. of Kiln Ltd - 14.12.07

Kiln announced this morning a recommended Cash Acquisition by Tokio Marine. The full press release is available below.

Summary

The boards of Tokio Marine & Nichido Fire Insurance Co., Ltd. ("TMNF") and Kiln Ltd ("Kiln") are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of Kiln by TMNF to be implemented by an amalgamation under the Bermuda Companies Act (the "Acquisition").

The Acquisition price of 150 pence per Kiln Share values the entire issued and to be issued share capital of Kiln at approximately £442.2 million in aggregate.

The Acquisition price of 150 pence per Kiln Share represents a premium of approximately 40.8 per cent. to the closing price of 106.5 pence per Kiln Share on 10 December 2007, being the last business day prior to Kiln announcing that it was in discussions regarding a possible offer for the Group; a premium of approximately 45.9 per cent. to the average closing price of 102.8 pence per Kiln Share for the 3 months to 13 December 2007 (the last business day prior to announcement); and a premium of approximately 33.0 per cent. to the average closing price of 112.8 pence per Kiln Share for the 12 months to 13 December 2007.

TMNF sees Kiln as playing a pivotal role in the expansion of its international underwriting operations and in enhancing its existing overseas activities. TMNF has a high regard for the management and underwriting teams within Kiln and values highly the culture that has made Kiln the successful business that it is. It is TMNF's intention, therefore, to retain the culture, identity and brand of Kiln.

Working with Kiln management, TMNF intends to develop a joint growth strategy and create a major underwriting platform for international commercial insurance and reinsurance in the UK, US, Continental Europe and Asia.

The Kiln Board, who have been so advised by Lexicon Partners, consider the terms of the offer to be fair and reasonable. In providing advice to the Kiln Board, Lexicon Partners has taken into account the commercial assessment of the Kiln Board.

The Kiln Board intends to recommend unanimously that Kiln Shareholders vote to approve the Acquisition at the Special General Meeting, as those Kiln Directors holding shares have undertaken irrevocably to do in respect of their own beneficial holdings of issued Kiln Shares (save where to do so would affect the tax treatment of such holdings) which amount in aggregate to 1,042,077 Kiln Shares representing approximately 0.36 per cent. of Kiln's issued share capital.

TMNF has also received an irrevocable undertaking from Berkley Insurance Company  in respect of 58,567,117 Kiln Shares, representing approximately 20.06 per cent. of Kiln's issued share capital, to vote to approve the Acquisition at the Special General Meeting. TMNF has therefore received irrevocable undertakings to vote to approve the Acquisition in respect of a total of 59,609,194 Kiln Shares, representing in aggregate approximately 20.42 per cent. of Kiln's issued share capital. These irrevocable undertakings will remain binding even if a higher competing offer is made for Kiln.

The Shareholder Circular, setting out the details of the Acquisition and the procedures to be followed to approve the Acquisition, will be posted to Kiln Shareholders shortly. The Acquisition is expected to become effective during the first quarter of 2008.

In light of the proposed Acquisition, Kiln's previously announced capital return is no longer expected to proceed. However, the circular to Kiln Shareholders in relation to the agreed sale of W.R. Berkley Insurance (Europe) Ltd is expected to be dispatched shortly.

FPK is acting as financial adviser to TMNF. Lexicon Partners is acting as financial adviser to Kiln.

Mr. Shuzo Sumi, President of TMNF, said:
"We have enjoyed a close and long-lasting business relationship with Kiln since its formation in 1962 and believe we share the same fundamental values and business philosophy. This agreement represents an important milestone in our stated strategy to expand internationally and we believe Kiln, with its underwriting expertise, skilled employees and  strong brand, represents the perfect partner. We are very excited to be working with Kiln and look forward to a long and successful collaboration."

Mr. Edward Creasy, Group Chief Executive Officer of Kiln, said:
"The Kiln Board believes the Acquisition represents an excellent outcome for Kiln, its shareholders, and employees. We believe Kiln's strategy will be facilitated by becoming part of a major international group, which recognises the strength of our brand, respects our existing culture and which will provide exciting opportunities for Kiln's employees.  We believe that TMNF, with its established national and international presence, its strong balance sheet and matching values will provide Kiln with excellent opportunities in all these respects.  We look forward to an exciting future working with TMNF."