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Prem has done it!!!!


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I agree Sanjeev. Also, they actually took a different approach than with Northbridge.

 

Northbridge acquisition was announced on December 1 following an initial approach by Prem on November 12. When the announce was made, all negotiations were completed and the special committee had approved the revised offer.

 

At this stage, the special committee has been formed and legal and financial advisors have been engaged. It took 9 business days from the hiring of financial advisors to the announcement in order to complete negotiations on an acceptable price for Northbridge. I figure that we could see an offer in the $65 range once it is all said and done.

 

This situation is also different since Fairfax wants to issue stock to raise cash to pay for the rest of Odyssey Re. That is where they surprised me most. First, I don't see why they want to carry so much cash. Second, I figure that many Odyssey Re shareholders would not mind continuing holding a piece of Odyssey Re via Fairfax. This would make it a lot easier to swallow for many who will consider this unfair or a low ball bid and would likely be a tax free exchange.

 

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They will have to sweeten that significantly to get my vote, as i would be VERY disappointed with that price!

 

As of June 30, 2009 the Book Value per share of Odyssey Re was $51.90. Since that time, the S&P 500 has increased 10%. And looking over the last 13-F, I suspect Odyssey Re's investment portfolio did even better than the S&P. Nonetheless, lets be conservative and use the book value per share as of June 30th, inclusive of the market's return since June 30th through today's date. This would imply a CURRENT book value per share of $57.09! (And this even ignores the leverage used in ORH boosting equity further, and ignores the Odyssey Re repurchases that were done well under book after June 30th). But lets be extra conservative and ignore all that as well)

 

Therefore, 1.16x current book value would conservatively be $66.23!!

 

If they want to claim they are making an offer for 1.16x book value, then they should use CURRENT book value which we all know is significantly higher that that of June 30th, 2009 (the market has rallied significantly since then). We all know book value per share that is to be reported for the 3rd Quarter is much higher.

 

In addition, as Parsad suggested, the premium for Northbridge was 1.30x book value per share.

 

Using the Northbridge premium of 1.30, times the CURRENT book vaule of approx. $57.09 = $74.22 per share for Odyssey Re.

 

They need to sweet that Deal quite a bit to get this concerned shareholder anywhere near in the ballpark of wanting to tender any shares. I would be perfectly happy owning Odyssey Re shares as a standalone company if it means giving the company away at that price.

 

 

 

 

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Well they've done it. I never thought this would happen this year.

But the premium is only like 20%.  ???

 

What's the likelihood that the deal will be sweetened? Was the Northbridge deal sweetend last time?

I don't think as a ffh holder you would want to pay anymore than what they are paying now.

 

Hhow long did it take northbridge deal to complete?

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Prem initially offered $36 for Northbridge or 20% above the last 30 day trading price. Then Scotia Capital explained to the special committee that fair value was between $37 and $41. Following some negotiations, Prem revised his offer to $38, then to $39 and the committee accepted.

 

It is all well described in the Directors' Circular dated December 8, 2008 under: "Background to the offer" that you can find under this website:

 

http://www.sedar.com/

 

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Prem initially offered $36 for Northbridge or 20% above the last 30 day trading price. Then Scotia Capital explained to the special committee that fair value was between $37 and $41. Following some negotiations, Prem revised his offer to $38, then to $39 and the committee accepted.

 

It is all well described in the Directors' Circular dated December 8, 2008 under: "Background to the offer" that you can find under this website:

 

http://www.sedar.com/

 

Cardboard

 

Well if this follows the same path and the final price is similar to the delta on Northbridge we'll be at exactly $65.

 

39/36*60=65

 

As the rest of my funds are still in FFH I'm conflicted. But 65 sounds right to me.

 

 

 

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Well done, everyone.  And a special thanks to Ericopoly, whose comments and analysis kept me in ORH when I was on the brink of selling out and moving to FFH.

 

I think Cardboard really helped sell me on the buyout thesis.  Anyway, they were pretty full of shit weren't they, but then... they were acting in the best interest of the FFH shareholders.  It would be stupid to tell everyone that they want to buyout ORH... so instead you tell people at the annual meeting that there would really be no point to a buyout, and when you raise $400m you issue a press release that it's just for a rainy day, you know.  Like I said before, "Fool me once shame on you, fool me twice shame on me."

 

 

 

 

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Well done, everyone.  And a special thanks to Ericopoly, whose comments and analysis kept me in ORH when I was on the brink of selling out and moving to FFH.

 

I think Cardboard really helped sell me on the buyout thesis.  Anyway, they were pretty full of shit weren't they, but then... they were acting in the best interest of the FFH shareholders.  It would be stupid to tell everyone that they want to buyout ORH... so instead you tell people at the annual meeting that there would really be no point to a buyout, and when you raise $400m you issue a press release that it's just for a rainy day, you know.  Like I said before, "Fool me once shame on you, fool me twice shame on me."

 

 

Yes, props to Cardboard, Vinay and probably some others who also pointed out the oddities in Fairfax's recent actions.

 

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Well done, everyone.  And a special thanks to Ericopoly, whose comments and analysis kept me in ORH when I was on the brink of selling out and moving to FFH.

 

I think Cardboard really helped sell me on the buyout thesis.  Anyway, they were pretty full of shit weren't they, but then... they were acting in the best interest of the FFH shareholders.  It would be stupid to tell everyone that they want to buyout ORH... so instead you tell people at the annual meeting that there would really be no point to a buyout, and when you raise $400m you issue a press release that it's just for a rainy day, you know.  Like I said before, "Fool me once shame on you, fool me twice shame on me."

 

 

Yes, props to Cardboard, Vinay and probably some others who also pointed out the oddities in Fairfax's recent actions.

 

 

 

This was so good it was practically trading on insider information.

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Reminds me of Jim Rogers line about how to make money in investing (something like this): "when you see a $20 bill lying on the ground you pick it up".

 

This also has a very large element of luck... timing is pretty much impossible to get right even some of the time.

 

Ladies & gents, lady luck was also smiling our way on this one...

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Prem initially offered $36 for Northbridge or 20% above the last 30 day trading price. Then Scotia Capital explained to the special committee that fair value was between $37 and $41. Following some negotiations, Prem revised his offer to $38, then to $39 and the committee accepted.

 

It is all well described in the Directors' Circular dated December 8, 2008 under: "Background to the offer" that you can find under this website:

 

http://www.sedar.com/

 

Cardboard

 

I don't see any directors circular that mentions the above. The only thing available is the press release for $39.

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Here is the Northbridge negociation story.

 

 

Following the Special Committee meeting, Messrs. Smith and Barbaro met with Mr. Bradley Martin, Vice

President, Chief Operating Officer and Corporate Secretary of Fairfax, to discuss the progress on the valuation work

of Scotia Capital and the Special Committee’s work. Messrs. Smith, Barbaro and Martin discussed, among other

things, the price and terms upon which Fairfax may be prepared to make an offer for the Shares it did not already

hold. In outlining such price and terms, Mr. Martin indicated that Fairfax had not settled on the form of goingprivate

transaction which it might propose. Messrs. Smith and Barbaro advised that, although the preparation of the

Valuation was still in process, an offer at Fairfax’s indicative price of $36.00 in cash per Share was unlikely to be

supported by the Special Committee.

On November 28, 2008, the Special Committee met again with Scotia Capital and Osler to, among other

things, receive an update from Scotia Capital regarding its progress in its valuation work. Scotia Capital updated the

Special Committee on discussions that it had held with management of Northbridge and reviewed in detail the

results of its preliminary work. Scotia Capital indicated that, subject to completion of due diligence, its preliminary

view was that an “en bloc” valuation range for the Shares was in the range of $37.00 to $41.00 per Share. As part of

its presentation to the Special Committee, Scotia Capital provided details regarding the application of the discountedcash flow analysis methodology, including key assumptions and limitations, and reviewed the other valuation

methodologies used in connection with its valuation work, which it had previously discussed with the Special

Committee. The Special Committee discussed with Scotia Capital various aspects of the valuation methodologies

employed and assumptions underlying such methodologies and the appropriateness of such assumptions. The

Special Committee then discussed strategic matters including potential future meetings with representatives of

Fairfax.

The next day Mr. Smith and Mr. Watsa discussed, among other things, the price and terms of a potential

Fairfax offer. Mr. Watsa indicated that if Fairfax were to proceed with an offer it would likely be structured as an

“insider bid”. In addition, Mr. Watsa indicated that if Fairfax did proceed with an offer it would be prepared to offer

$38.00 in cash per Share.

Messrs. Smith, Watsa and Martin had several conversations during the day of November 29, 2008

regarding the potential price at which Fairfax was prepared to make an offer for the Shares and throughout these

conversations Fairfax reiterated that it was unwilling to offer more than $38.00 in cash per Share.

The Special Committee met on November 30, 2008 with Scotia Capital and Osler to, among other things,

receive a further update from Scotia Capital regarding its progress in its valuation work. Scotia Capital again

reviewed the various methodologies it was using in its valuation work and indicated that it was in a position to

deliver its Valuation and Fairness Opinion. In light of the substantial progress which Scotia Capital had made to date

in its valuation work and the discussions which had occurred between Messrs. Smith, Watsa and Martin the previous

day, the Special Committee determined that it would be able to support an offer from Fairfax at a price of $39.00 in

cash per Share and Scotia Capital indicated it would be able to deliver a fairness opinion in respect of such an offer.

Following that meeting, Mr. Smith contacted Mr. Watsa to convey this determination to Mr. Watsa. Mr. Watsa

repeated his previous advice that Fairfax was unwilling to offer more than $38.00 in cash per Share but that Fairfax

would further consider the Special Committee’s position. Mr. Smith relayed the substance of his discussions with

Mr. Watsa to the Special Committee.

Later that day, Mr. Watsa contacted Mr. Smith to advise that Fairfax was prepared to raise its offer to

$39.00 in cash per Share provided that the Special Committee confirmed its support of Fairfax’s revised offer. Mr.

Watsa also proposed that, if Fairfax’s revised offer would be supported by the Special Committee, Fairfax and

Northbridge would issue a joint press release announcing Fairfax’s offer prior to the opening of trading on the TSX

on December 1, 2008. Mr. Smith responded that he would need to confer with the Special Committee regarding this

revised offer and Scotia Capital would need to deliver its Valuation and Fairness Opinion in respect of such an offer.

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Thanks for that.

I guess the filings on sedar have changed and they've taken that out i.e. there is no circular on Dec 8th.

 

In any event, the only publicly announced price was for $39 on Dec 1st.

And that price was the final and subsequently accepted price. All prior negotiations below this price, i.e. $38 was not made formal and public, and FFH did not revise their original "public" offer.

Which indicates to me, that in all probability the ORH price announced will unlikely be revised upwards and $60 will be final.

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