Allied World Assurance to buy Darwin for $550M

The purchase price is equivalent to $32 per share, which is a 6 percent premium to Darwin's closing price of $30.20 on Friday.

The companies said the per-share purchase price might be lowered of certain capitalization terms are not met by Darwin, a unit of Alleghany Corp.

When the deal closes, aimed for the fourth quarter, Alleghany expects to receive net proceeds of $300 million in cash for its 9.4 million shares of Darwin stock, or about 55 percent of the company's outstanding shares.

The deal has been approved by both companies' boards. It is still subject to regulatory and other approvals, including approval by Darwin's shareholders. A unit of Alleghany Corp. has agreed to vote 40 percent of the outstanding Darwin shares in favor of the deal.

The transaction is expected to close in the fourth quarter of 2008 and is expected to boost Allied World's earnings in the first full year after closing.

Darwin President and Chief Executive Officer Stephen J. Sills said he will retire when the deal closes. At that time, the company said Darwin's Chief Financial Officer Jack Sennott will become Chief Operating Officer.

In morning trading, Darwin shares jumped $1.55, or 5.1 percent, to $31.75. Shares of Alleghany and Allied World Assurance remained unchanged.