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OFFER TO PURCHASE FOR CASH
BY
WHITE MOUNTAINS INSURANCE GROUP, LTD.
OF UP TO 1,000,000 OF ITS COMMON SHARES
AT A PURCHASE PRICE OF $500 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MARCH 22, 2012, UNLESS
THE OFFER IS EXTENDED (SUCH DATE AND TIME, AS THEY MAY BE
EXTENDED, THE "EXPIRATION DATE").
White Mountains Insurance Group, Ltd., a company organized under the laws of Bermuda (the "Company", "White Mountains", "we" or "us"), is offering to purchase up to 1,000,000 of its Common Shares, par value $1.00 per share (the "Shares"), at a purchase price of $500 per Share (the "Purchase Price"), net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase (as it may be amended or supplemented from time to time, this "Offer to Purchase") and in the related Letter of Transmittal (which together, as they may be amended or supplemented from time to time, constitute the "Offer"), including the proration provisions described herein. Because of the proration and "odd lot" priority provisions described in this Offer to Purchase, fewer than all of the Shares tendered may be purchased if more than the number of Shares the Company seeks are properly tendered and not properly withdrawn. Shares tendered but not purchased in the Offer will be returned to the tendering shareholders at the Company's expense promptly after the expiration of the Offer. See "Section 1. Number of Shares; Proration" and "Section 2. Procedures for Tendering Shares".
In the event that more than 1,000,000 Shares are tendered in the Offer, we may exercise our right to increase the number of Shares sought in the Offer by an amount not exceeding 2% of our outstanding Shares without extending the Expiration Date. We also expressly reserve the right, in our sole discretion, to purchase additional Shares, subject to applicable law. See "Section 1. Number of Shares; Proration" and "Section 14. Extension of the Offer; Termination; Amendment".
This Offer is not conditioned upon the receipt of financing or any minimum number of Shares being tendered. This Offer is, however, subject to certain conditions. See "Section 8. Conditions to the Offer".
The Shares are listed and traded on the New York Stock Exchange (the "NYSE") under the symbol "WTM" and the Bermuda Stock Exchange under the symbol "WTM-BH". On February 23, 2012, the last reported closing sale price of the Shares on the NYSE was $496.15 per Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. See "Section 7. Price Range of Shares; Dividends".
On February 22, 2012, prior to the first public announcement of the Offer, the Company repurchased from Berkshire Hathaway, Inc. (or its affiliates) 89,279 Shares, which were all the Shares beneficially owned by Berkshire Hathaway, for cash at a purchase price of $500 per share.
OUR BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NONE OF THE COMPANY, OUR BOARD OF DIRECTORS, THE DEPOSITARY OR THE INFORMATION AGENT MAKES ANY RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AFTER CONSULTING WITH HIS OR HER OWN ADVISORS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. IN DOING SO, SHAREHOLDERS SHOULD READ CAREFULLY THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING THE PURPOSES AND EFFECTS OF THE OFFER. SEE "SECTION 5. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER".
YOU SHOULD READ CAREFULLY THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR MAKING THE OFFER. SEE "SECTION 5. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER".
ALL OF OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE ADVISED US THAT THEY DO NOT INTEND TO TENDER ANY SHARES OWNED BY THEM IN THE OFFER. SEE "SECTION 11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICER; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES".
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
Offer to Purchase dated February 24, 2012
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's Shares should (1) if such shareholder holds the Shares in its own name, complete and sign the Letter of Transmittal in accordance with the instructions in the Letter of Transmittal, have such shareholder's signature thereon guaranteed (if required by Instruction 1 to the Letter of Transmittal), mail, express or overnight delivery, or deliver the Letter of Transmittal and any other required documents to the Depositary (as defined herein) and either deliver the certificates for such Shares (the "Certificates") along with the Letter of Transmittal to the Depositary or tender such Shares pursuant to the procedures for book-entry transfer set forth in "Section 2. Procedures for Tendering Shares", (2) if such shareholder's Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder or (3) if such shareholder is an institution participating in The Depository Trust Company, tender the Shares according to the procedure for book-entry transfer described in "Section 2. Procedures for Tendering Shares". Any shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee to tender such Shares.
Any shareholder who desires to tender Shares and whose Certificates are not immediately available, or who cannot comply with the procedures for book-entry transfer described in this Offer to Purchase on a timely basis or who cannot deliver all required documents to the Depositary prior to the expiration of the Offer, may nevertheless tender such Shares by following the procedures for guaranteed delivery set forth in "Section 2. Procedures for Tendering Shares".
TO TENDER SHARES PROPERLY, YOU OR, IN THE CASE OF SHARES REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE, YOUR NOMINEE MUST PROPERLY COMPLETE AND DULY EXECUTE THE LETTER OF TRANSMITTAL OR AN AGENT'S MESSAGE IN LIEU OF THE LETTER OF TRANSMITTAL.
THE COMPANY IS NOT MAKING THE OFFER TO, AND WILL NOT ACCEPT ANY TENDERED SHARES FROM, SHAREHOLDERS IN ANY JURISDICTION WHERE IT WOULD BE ILLEGAL TO DO SO. HOWEVER, THE COMPANY MAY, IN ITS DISCRETION, TAKE ANY ACTIONS NECESSARY TO MAKE THE OFFER TO SHAREHOLDERS IN ANY SUCH JURISDICTION.
Questions and requests for assistance may be directed to the Information Agent at its address and telephone number set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may also be obtained from the Information Agent at the Company's expense. Shareholders may also contact their brokers, dealers, commercial banks or trust companies for assistance concerning the Offer.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. SHAREHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL OR TO WHICH THE COMPANY HAS REFERRED YOU. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. IF MADE OR GIVEN, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OUR BOARD OF DIRECTORS, THE DEPOSITARY OR THE INFORMATION AGENT.
We and our affiliates, including our executive officers and directors, will be prohibited by Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from
repurchasing any of the Shares outside of the Offer until at least the tenth business day after the expiration or termination of the Offer. Following that time, we expressly reserve the absolute right, in our sole discretion from time to time in the future, to purchase Shares, whether or not any Shares are purchased pursuant to the Offer, through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine, which may be more or less than the price to be paid pursuant to the Offer and could be for cash or other consideration. We can not assure you as to which, if any, of these alternatives, or combinations thereof, we might pursue.
TABLE OF CONTENTS
SUMMARY TERM SHEET |
i | |
FORWARD-LOOKING STATEMENTS |
vii |
|
INTRODUCTION |
1 |
|
THE OFFER |
3 |
|
1. Number of Shares; Proration |
3 | |
2. Procedures for Tendering Shares |
4 | |
3. Withdrawal Rights |
8 | |
4. Acceptance for Payment and Payment for Shares |
9 | |
5. Purpose of the Offer; Certain Effects of the Offer |
10 | |
6. Certain U.S. Federal Income Tax Consequences |
11 | |
7. Price Range of Shares; Dividends |
15 | |
8. Conditions to the Offer |
15 | |
9. Certain Information Concerning the Company |
17 | |
10. Source and Amount of Funds |
18 | |
11. Interests of Directors and Executive Officer; Transactions and Arrangements Concerning the Shares |
18 | |
12. Certain Legal Matters |
20 | |
13. Effects of the Offer on the Market for Shares; Registration under the Exchange Act |
20 | |
14. Extension of the Offer; Termination; Amendment |
21 | |
15. Fees and Expenses |
22 | |
16. Miscellaneous |
23 | |
SCHEDULE I |
24 |
|
SCHEDULE II |
25 |
SUMMARY TERM SHEET
White Mountains Insurance Group, Ltd. (the "Company", "White Mountains", "we" or "us") is offering to purchase up to 1,000,000 of its Common Shares, par value $1.00 per share (the "Shares") at a purchase price of $500 per share, net to the seller in cash, less any applicable withholding taxes and without interest, upon the terms and subject to the conditions as set forth in this Offer to Purchase. We are providing this summary term sheet containing frequently asked questions and responses for your convenience. We urge you to read this Offer to Purchase and Letter of Transmittal and the other documents that are incorporated by reference because the information in this summary is not complete. We have included references to the sections of this Offer to Purchase where you will find a more complete discussion of the topics in this summary.
Who Is Offering To Buy My Securities, And Why?
The Offer to purchase the Shares is being made by White Mountains, a company organized under the laws of Bermuda. The Offer is being made to utilize a portion of the Company's undeployed capital and to provide shareholders with added liquidity. If you choose to tender your Shares, you will avoid the usual transaction costs associated with any market sale. If you choose not to tender your Shares, the Offer will serve to increase your ownership interest in the Company and thus in the Company's future earnings and assets, because the Shares purchased pursuant to the Offer will be cancelled. See "Section 5. Purpose of the Offer; Certain Effects of the Offer" and "Section 9. Certain Information Concerning the Company".
What Are The Classes And Amounts Of Securities Sought In The Offer?
We are offering to purchase 1,000,000 Shares or, if a lesser number of Shares are properly tendered, such lesser number of Shares as are properly tendered and not properly withdrawn, subject to the "odd lot" and proration provisions described in "Section 1. Number of Shares; Proration". As of February 23, 2012, there were 7,455,585 Shares outstanding. The Shares we are seeking to purchase through this Offer represent approximately 13.4% of the Shares outstanding as of such date. See "INTRODUCTION".
The Shares are currently "margin securities" under the rules of the Federal Reserve Board. This has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Following the repurchase of Shares pursuant to the Offer, the Shares not purchased will continue to be "margin securities" for purposes of the Federal Reserve Board's margin regulations. See "Section 13. Effects of the Offer on the Market for Shares; Registration under the Exchange Act".
If more than 1,000,000 Shares are properly tendered in the Offer, we may exercise our right to increase the number of Shares sought in the Offer by an amount not exceeding 2% of our outstanding Shares without extending the Expiration Date. We also expressly reserve the right, in our sole discretion, to purchase additional Shares, subject to applicable law. See "Section 1. Number of Shares; Proration".
If more than 1,000,000 Shares (or such greater number of Shares as we may elect to purchase, subject to applicable law) are properly tendered, all Shares properly tendered will be purchased on a pro rata basis, subject to the odd lot priority provisions described herein. The Offer is not conditioned on any minimum number of Shares being tendered by shareholders. See "Section 1. Number of Shares; Proration".
How Much Are You Offering To Pay And What Is The Form Of Payment?
We are offering to purchase up to 1,000,000 Shares at a price of $500. See "Section 1. Number of Shares; Proration".
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If your Shares are purchased in the Offer, you will receive the Purchase Price, net to the seller in cash, less any applicable withholding taxes and without interest, promptly after the Expiration Date. Under no circumstances will we pay interest on the Purchase Price, including, but not limited to, by reason of any delay in making payment. The Offer is scheduled to expire at 12:00 midnight, New York City time, on March 22, 2012, unless the Offer is extended by us. See "Section 1. Number of Shares; Proration" and "Section 14. Extension of the Offer; Termination; Amendment".
What Will Happen If The Offer Is Undersubscribed?
In the event that less than the number of Shares we seek are properly tendered, subject to the terms and conditions of this Offer, we will purchase such tendered Shares.
What Happens If More Than 1,000,000 Shares Are Tendered At Or Below The Purchase Price? Will Tendered Shares Be Prorated?
In the event that more than 1,000,000 Shares (or such greater number of Shares as we may elect to purchase, subject to applicable law) are properly tendered and not properly withdrawn, we will accept Shares for purchase in the following order of priority:
- •
- First, we will purchase all "odd lots" of less than 100 Shares from
shareholders who properly tender all of their Shares and who do not properly withdraw them before the Expiration Date; and
- •
- Second, after purchasing all the "odd lots" that were properly tendered, we will purchase Shares from all other holders who properly tender Shares and who do not properly withdraw them before the Expiration Date, on a pro rata basis, with appropriate adjustments to avoid purchases of fractional Shares, until we have acquired the number of Shares that we have offered to purchase.
Therefore, we may not purchase all of the Shares that you tender. See "Section 1. Number of Shares; Proration".
If I Own Fewer Than 100 Shares And I Tender All Of My Shares, Will I Be Subject To Proration?
If you own beneficially or of record fewer than 100 Shares in the aggregate, properly tender all of your Shares and do not properly withdraw them before the Expiration Date, and complete the section entitled Odd Lots in the Letter of Transmittal and, if applicable, in the Notice of Guarantee Delivery, we will purchase all of your Shares without subjecting them to the proration procedure. See "Section 1. Number of Shares; Proration".
Do You Have The Financial Resources To Make Payment?
If we purchase 1,000,000 Shares at $500 per Share, then the aggregate cost to us will be approximately $500,000,000. We anticipate meeting this cost with available cash, including cash from the sale of liquid investments. The Offer is not subject to any financing condition. See "Section 10. Source and Amount of Funds".
Are There Any Conditions To The Offer?
Our obligation to purchase Shares tendered depends upon a number of conditions that must be satisfied or waived by us prior to the Expiration Date. See "Section 8. Conditions to the Offer".
How Do I Tender My Shares?
If you own your Shares in your own name as a holder of record and decide to tender your Shares, you must deliver the Certificates evidencing your Shares, together with a completed Letter of
ii
Transmittal with any required signature guarantees or other required documents, to Computershare Trust Company, N.A. ("Computershare"), the Depositary for the Offer, not later than the time the Offer expires. Deliveries to the Company, the Information Agent or The Depository Trust Company ("DTC") will not be forwarded to the Depositary and will not constitute a valid delivery.
If your Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, meaning your Shares are owned in "street name", contact your broker, dealer, commercial bank, trust company or other nominee and have it tender your Shares for you.
If you are unable to deliver something that is required to the Depositary by the expiration of the Offer, you may get extra time to do so by having a broker, bank or other fiduciary who is a member of the Securities Transfer Agent Medallion Program, The New York Stock Exchange Medallion Program or the Stock Exchange Medallion Program guarantee that the missing items will be received by the Depositary within three NYSE trading days. However, the Depositary must receive the missing items within that three-day trading period. See "Section 2. Procedure for Tendering Shares".
If you are a participant in the OneBeacon 401(k) Savings and Employee Stock Ownership Plan (the "OneBeacon Plan") or the Sirius International Holding Company, Inc. 401(k) Savings and Investment Plan (the "Sirius Plan" and, each of the OneBeacon Plan and the Sirius Plan, a "Plan") and you wish to tender any of your Shares held in such plan, you must follow the separate instructions and procedures described in Section 2 (including an earlier deadline for delivering materials) and you must review separate instructions related to such Plan enclosed with this Offer to Purchase.
How Long Do I Have To Tender In The Offer?
You will have until 12:00 midnight, New York City time, on March 22, 2012, to tender your Shares in the Offer, unless we extend the Offer. We may choose to extend the Offer in our sole discretion at any time. Further, if you cannot deliver everything that is required in order to make a valid tender by that time, you may be able to use a guaranteed delivery procedure, which is described later in this Offer to Purchase. See "Section 2. Procedures for Tendering Shares".
If a broker, dealer, commercial bank, trust company or other nominee holds your Shares, it is likely that it has an earlier deadline for instructing it to accept the Offer. See "Section 2. Procedures for Tendering Shares".
If you wish to tender Shares held in a Plan, it is likely that such Plan has an earlier deadline for instructing it to accept the Offer. See "Section 2. Procedures for Tendering Shares".
Can The Offer Be Extended Or Terminated And Under What Circumstances?
We are reserving the right to extend the Offer in our sole discretion. Also, should we, pursuant to the terms and conditions of the Offer, change the price of the Offer or reduce the number of Shares sought in the Offer, increase the number of Shares sought in the Offer by an amount exceeding 2% of our outstanding Shares or otherwise materially amend the Offer, we will ensure that the Offer remains open long enough to comply with U.S. Federal securities laws. It is possible that this could involve an extension of the Offer up to 10 additional business days in some cases. We cannot assure you, however, that we will extend the Offer or, if we extend it, for how long. See "Section 14. Extension of the Offer; Termination; Amendment".
We also expressly reserve the right, in our sole discretion, to withdraw or terminate the Offer and not accept for payment or pay for any Shares not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for Shares upon the occurrence of any of the conditions specified in Section 8 by giving oral or written notice of the termination or postponement to the Depositary and making a public announcement of the termination or postponement. Additionally, we expressly reserve the right, subject to applicable law, to postpone payment for Shares under
iii
circumstances including but not limited to the occurrence of any of the conditions specified in "Section 8. Conditions to the Offer" by notifying the Depositary and making a public announcement thereof.
How Will I Be Notified If The Offer Is Extended Or Amended?
If we extend the Offer, the Company or D.F. King & Co., Inc., the Information Agent, will make a public announcement of the extension, not later than 9:00 a.m., New York City time, on the next business day after the day on which the Offer was scheduled to expire. We will announce any amendment by making a public announcement of the amendment. See "Section 14. Extension of the Offer; Termination; Amendment".
When And How Will The Company Pay For The Shares I Tender That Are Accepted For Purchase?
We will pay the Purchase Price, net to the seller in cash, less any applicable withholding taxes and without interest, for the Shares we purchase promptly after the expiration of the Offer and the acceptance of the Shares for payment. We will pay for the Shares accepted for purchase by depositing the aggregate Purchase Price with the Depositary promptly after the expiration of the Offer. The Depositary will act as your agent and will transmit to you the payment for all of your Shares accepted for payment. See "Section 4. Acceptance for Payment and Payment of Shares".
May I Tender Only A Portion Of The Shares That I Hold?
Yes. You do not have to tender all of the Shares that you own to participate in the Offer.
Until What Time Can I Withdraw Previously Tendered Shares?
You can withdraw previously tendered Shares at any time until the Offer has expired, or until such later time and date to which the Offer is extended. In addition, unless we have already accepted your tendered Shares for payment, you may withdraw your tendered Shares at any time after 12:00 midnight, New York City time, on March 22, 2012. See "Section 3. Withdrawal Rights".
How Do I Withdraw Previously Tendered Shares?
To withdraw Shares you must deliver a written notice of withdrawal with the required information to the Depositary while you still have the right to withdraw the Shares. If you have used more than one Letter of Transmittal or have otherwise tendered Shares in more than one group of Shares, you may withdraw Shares using either separate notices of withdrawal or a combined notice of withdrawal, so long as the required information is included. Some additional requirements apply if your Shares have been tendered under the procedure for book-entry transfer set forth in "Section 2. Procedures for Tendering Shares". If you have tendered your Shares by giving instructions to a bank, broker, dealer, trust company or other nominee, you must instruct such nominee to arrange for the withdrawal of your Shares. See "Section 3. Withdrawal Rights".
If you wish to withdraw tendered Shares held in a Plan, you must deliver an instruction form with the required information to the agent for the trustee of such Plan, in accordance with the instructions in the letter furnished to you as a participant in such Plan. If you wish to withdraw tendered Shares held in a Plan, you must withdraw all such tendered Shares. See "Section 3. Withdrawal Rights".
Is the Offer a result of your recent purchase of Shares from Berkshire Hathaway?
On February 22, 2012, we purchased 89,279 of our Shares from Berkshire Hathaway, Inc. (or its affiliates) for a cash price of $500 per share. We made this purchase pursuant to a pre-existing Board authorization to purchase Shares. The Board's decision to commence the Offer was an independent decision and was not required as a result of the purchase from Berkshire Hathaway..
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What Does The Company's Board Of Directors Think Of The Offer?
The Board of Directors of the Company makes no recommendation as to whether you should tender any or all of your Shares, or hold them. Rather, they encourage you to make your own decision after consulting with your own advisor as to whether or not to tender Shares, and if so, how many to tender. In doing so, you should read carefully the information in this Offer to Purchase and the Letter of Transmittal.
Will Directors Or Executive Officers Of The Company Tender Shares In The Offer?
All of our directors and executive officers have advised us that they do not intend to tender Shares pursuant to the Offer. Accordingly, if we complete the Offer, the proportional holdings of our directors and executive officers will increase. However, our directors and executive officers may, in compliance with applicable law, sell their Shares in open market transactions at prices that may or may not be more favorable than the Purchase Price to be paid to our shareholders in the Offer. See "Section 11. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares".
What Will Happen If I Do Not Tender My Shares?
Shareholders who choose not to tender will own a greater percentage ownership of our outstanding Shares following the consummation of the Offer. See "Section 5. Purpose of the Offer; Certain Effects of the Offer".
What Does The Company Intend To Do With The Purchased Shares After The Offer Expires?
We will cancel the Shares. See "Section 5. Purpose of the Offer; Certain Effects of the Offer".
Does The Company Intend To Repurchase Any Shares Other Than Pursuant To The Tender Offer During Or After The Tender Offer?
Rule 13e-4 of the Exchange Act generally prohibits us and our affiliates from purchasing any Shares, other than pursuant to the Offer, until at least ten business days after the expiration of the Offer, except pursuant to certain limited exceptions provided in Rule 14e-5 of the Exchange Act. Beginning ten business days after the expiration date of the tender offer, we may make Share repurchases from time to time including purchases on the open market and/or in private transactions. The Company has 30,668 Shares remaining under its existing Share repurchase authorization (which will not be reduced by purchases in the Offer). Whether we make additional Share repurchases will depend on many factors, including the number of Shares, if any, that we purchase in the Offer, the number of Shares our Board authorizes to be repurchased, our business and financial performance (including our liquidity and alternative uses for our resources) and situation, the business and market conditions at the time, including the price of the Shares, and such other factors as we may consider relevant. Any of these Share repurchases may be on the same terms or on terms that are more or less favorable to the selling shareholders in those transactions than the terms of the Offer.
Following The Offer, Will The Company Continue As A Public Company?
We do not intend or believe that our purchase of Shares through the Offer will cause our remaining Shares to be delisted from the NYSE or cause us to be eligible for deregistration under the Exchange Act. See "Section 8. Conditions to the Offer".
What Is The Market Value Of My Shares As Of A Recent Date?
On February 23, 2012, the last reported closing sale price of the Shares reported on the NYSE was $496.15 per Share. We advise you to obtain a recent quotation for the Shares in deciding whether to tender your Shares. See "Section 7. Price Range of Shares; Dividends".
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What Are The United States Federal Income Tax Consequences If I Tender My Shares?
The receipt of cash pursuant to the Offer generally will be treated for United States Federal income tax purposes either (a) as a sale or exchange eligible for capital gain or loss treatment or (b) as a dividend. Non-U.S. shareholders generally will not be subject to U.S. Federal income taxation on the receipt of cash pursuant to the Offer. See "Section 2. Procedures For Tendering Shares" and "Section 6. Certain U.S. Federal Income Tax Consequences".
Who Can I Talk To If I Have Questions About the Tender Offer?
You can call D.F. King & Co., Inc. ("D.F. King"), the Information Agent for the Offer, at (800) 967-4607 (toll free). For further contact information, see the back cover of this Offer to Purchase.
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FORWARD-LOOKING STATEMENTS
This Offer to Purchase may contain "forward-looking statements". All statements, other than statements of historical facts, included or referenced in this release which address activities, events or developments which we expect or anticipate 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 the Company's: change in adjusted book value per share or return on equity; business strategy; 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; expansion and growth of our business and operations; and future capital expenditures. These statements are based on certain assumptions and analyses made by the Company 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 our expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations, including: the risks associated with Item 1A of the Company's 2010 Annual Report on Form 10-K; claims arising from catastrophic events, such as hurricanes, earthquakes, floods, fires, terrorist attacks or severe winter weather; the continued availability of capital and financing; general economic, market or business conditions; business opportunities (or lack thereof) that may be presented to it and pursued; 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 the Company, 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; other factors, most of which are beyond the Company's control. Consequently, all of the forward-looking statements made in this Offer to Purchase are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company or its business or operations. The Company assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise.
Except for our obligations under Rule 13e-4(c)(3) and Rule 13e-4(e)(3) of the Exchange Act to disclose any material changes in the information previously disclosed to shareholders or as otherwise required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
You should read this Offer to Purchase and the documents that we reference in this Offer to Purchase and have filed as exhibits to the Tender Offer Statement on Schedule TO filed with the SEC, of which this Offer to Purchase is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by each of these cautionary statements.
vii
INTRODUCTION
To the Holders of Common Shares of White Mountains Insurance Group, Ltd.:
White Mountains Insurance Group, Ltd. hereby offers to purchase 1,000,000 Shares of its outstanding Common Shares, par value $1.00 per share, or such lesser number of Shares as are properly tendered and not properly withdrawn at a purchase price of $500 per Share, net to the seller in cash, less any applicable withholding taxes and without interest. Our Offer is being made upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together, as they may be amended or supplemented from time to time constitute the Offer).
Only Shares properly tendered and not properly withdrawn will be purchased. However, because of the proration provisions described in this Offer to Purchase, not all of the Shares tendered may be purchased if more than the number of Shares we seek are properly tendered. We will return any Shares that are tendered but not purchased pursuant to the Offer promptly following the Expiration Date. See "Section 2. Procedures for Tendering Shares".
OUR BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NONE OF THE COMPANY, OUR BOARD OF DIRECTORS (THE "BOARD"), THE DEPOSITARY OR THE INFORMATION AGENT MAKES ANY RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AFTER CONSULTING WITH HIS OR HER OWN ADVISORS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. IN DOING SO, SHAREHOLDERS SHOULD READ CAREFULLY THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL INCLUDING THE PURPOSES AND EFFECTS OF THE OFFER. SEE "SECTION 5. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER".
ALL OF OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE ADVISED US THAT THEY DO NOT INTEND TO TENDER ANY SHARES OWNED BY THEM IN THE OFFER. SEE "SECTION 11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICER; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES". ACCORDINGLY, IF WE COMPLETE THE OFFER, THE PROPORTIONAL HOLDINGS OF OUR DIRECTORS AND EXECUTIVE OFFICERS WILL INCREASE. HOWEVER, OUR DIRECTORS AND EXECUTIVE OFFICERS MAY, IN COMPLIANCE WITH APPLICABLE LAW, SELL THEIR SHARES IN OPEN MARKET TRANSACTIONS AT PRICES THAT MAY OR MAY NOT BE MORE FAVORABLE THAN THE PURCHASE PRICE TO BE PAID TO OUR SHAREHOLDERS. SEE "SECTION 11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES".
THE OFFER IS NOT CONDITIONED UPON THE RECEIPT OF FINANCING OR ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN CONDITIONS. SEE "SECTION 8. CONDITIONS TO THE OFFER".
AS OF FEBRUARY 23, 2012, AFTER OUR PURCHASE OF 89,279 SHARES FROM BERKSHIRE HATHAWAY INC., THERE WERE 7,455,585 SHARES OUTSTANDING. ACCORDINGLY, THE 1,000,000 SHARES WE ARE SEEKING TO PURCHASE THROUGH THIS OFFER REPRESENT APPROXIMATELY 13.4% OF THE SHARES OUTSTANDING AS OF SUCH DATE.
In the event that more than 1,000,000 Shares are tendered in the Offer, we may exercise our right to increase the number of Shares sought in the Offer by an amount not exceeding 2% of our outstanding Shares without extending the Expiration Date. We also expressly reserve the right, in our sole discretion, to purchase additional Shares, subject to applicable law.
If more than 1,000,000 Shares (or such greater number of Shares as we may elect to purchase, subject to applicable law) are properly tendered and not properly withdrawn, we will purchase Shares in the following order of priority:
- •
- First, we will purchase all "odd lots" of less than 100 Shares from
shareholders who properly tender all of their Shares and who do not properly withdraw them before the Expiration Date; and
- •
- Second, after purchasing all the "odd lots" that were properly tendered, we will purchase Shares from all other holders who properly tender Shares and who do not properly withdraw them before the Expiration Date, on a pro rata basis, with appropriate adjustments to avoid purchases of fractional Shares, until we have acquired the number of Shares that we have offered to purchase.
Therefore, we may not purchase all of the Shares that you tender.
The Purchase Price will be paid, net to the seller in cash, less any applicable withholding taxes and without interest, for all Shares purchased. Tendering shareholders who hold Shares registered in their own name and who tender their Shares directly to the Depositary will not be obligated to pay brokerage commissions, solicitation fees or stock transfer taxes on the purchase of Shares by us in the Offer. Shareholders holding Shares in a brokerage account or otherwise through brokers, dealers, commercial banks, trust companies or other nominees are urged to consult their brokers, dealers, commercial banks, trust companies or such other nominees to determine whether transaction costs may apply if shareholders tender Shares through such nominees and not directly to the Depositary. See "Section 2. Procedures for Tendering Shares", "Section 6. Certain U.S. Federal Income Tax Consequences" and "Section 15. Fees and Expenses".
The Company will pay all reasonable charges and expenses of the Information Agent and the Depositary incurred in connection with the Offer. All Shares tendered but not purchased pursuant to the Offer will be returned to the tendering shareholders at the Company's expense.
The Shares are listed and traded on the NYSE under the symbol "WTM" and the Bermuda Stock Exchange under the symbol "WTM-BH". On February 23, 2012, the last reported closing sale price of the Shares on the NYSE was $496.15 per Share. Shareholders are urged to obtain a current market quotation for the Shares. See "Section 7. Price Range of Shares; Dividends".
YOU SHOULD READ CAREFULLY THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR MAKING THE OFFER. SEE "SECTION 5. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER".
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THE OFFER
1. Number of Shares; Proration. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Company will accept for payment, and will pay for up to 1,000,000 Shares, properly tendered and not properly withdrawn in accordance with "Section 3. Withdrawal Rights", before the Expiration Date at a purchase price of $500 per Share, net to the seller in cash, less any applicable withholding taxes and without interest.
The term "Expiration Date" means 12:00 midnight, New York City time, on March 22, 2012, unless and until the Company shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Company under Section 14, shall expire.
If the Offer is oversubscribed as described below, Shares properly tendered and not properly withdrawn will be subject to proration, except for "odd lots". Except as described herein, withdrawal rights expire at the Expiration Date.
Subject to all applicable laws and the terms and conditions of the Offer, the Company reserves the right, as described in "Section 8. Conditions to the Offer" and in "Section 14. Extension of the Offer; Termination; Amendment", to waive conditions thereto, in its sole discretion, and/or extend, withdraw, terminate, delay or amend the Offer in any case by making a public announcement thereof. There can be no assurance, however, that the Company will exercise its right to extend the Offer.
In the event that more than 1,000,000 Shares are properly tendered in the Offer, we may exercise our right to increase the number of Shares sought in the Offer by an amount not exceeding 2% of our outstanding Shares without extending the Expiration Date. If we exercise our right to increase the number of Shares sought in the Offer by an amount not exceeding 2% of our outstanding Shares, then we could have as few as 6,306,474 Shares outstanding following the purchase of the Shares tendered in the Offer. We also expressly reserve the right, in our sole discretion, to purchase additional Shares subject to applicable legal requirements.
Only Shares properly tendered and not properly withdrawn will be purchased. However, because of the proration provisions of the Offer, not all of the Shares tendered may be purchased if more than the number of Shares we seek are properly tendered. All Shares tendered and not purchased in the Offer will be returned to the tendering shareholders at our expense promptly following the Expiration Date.
THE OFFER IS NOT CONDITIONED UPON THE RECEIPT OF FINANCING OR ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "SECTION 8. CONDITIONS TO THE OFFER".
Priority of Purchases. If more than 1,000,000 Shares (or such greater number of Shares as the Company may elect to purchase, subject to applicable law) are properly tendered and not properly withdrawn, we will purchase Shares in the following order of priority:
- •
- First, we will purchase all "odd lots" of less than 100 Shares from
shareholders who properly tender all of their Shares and who do not properly withdraw them before the Expiration Date; and
- •
- Second, after purchasing all the "odd lots" that were properly tendered, we will purchase Shares from all other holders who properly tender Shares and who do not properly withdraw them before the Expiration Date, on a pro rata basis, with appropriate adjustments to avoid purchases of fractional Shares, until we have acquired the number of Shares that we have offered to purchase.
Therefore, we may not purchase all of the Shares that you tender.
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Odd Lots. The term "odd lots" means all Shares tendered by any person (an "Odd Lot Holder") who owned beneficially or of record a total of fewer than 100 Shares and so certified in the appropriate place on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. To qualify for the odd lot preference, an odd lot holder must tender all Shares owned in accordance with the procedures described in Section 4. Odd lots will be accepted for payment before any proration of the purchase of other tendered Shares. Any Odd Lot Holder wishing to tender all of the shareholder's Shares pursuant to the Offer must complete the section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery. See "Section 2. Procedures for Tendering Shares".
Proration. In the event that proration of tendered Shares is required, the Company will determine the final proration factor as promptly as practicable after the Expiration Date. Proration for each shareholder tendering Shares (excluding Odd Lot Holders) will be based on the ratio of the number of Shares properly tendered and not properly withdrawn by the shareholder to the total number of Shares properly tendered and not properly withdrawn by all shareholders excluding Odd Lot Holders. Although the Company does not expect that it will be able to announce the final proration factor until a reasonable time after expiration of the period to complete tenders made by Guaranteed Delivery, it will announce preliminary results of proration by press release as promptly as practicable after the Expiration Date. Shareholders may obtain such preliminary information from the Information Agent and may be able to obtain such information from their brokers or financial advisors.
All Shares tendered but not purchased pursuant to the Offer will be returned to the tendering shareholders at the Company's expense promptly (which, in the event of proration, will not be until a reasonable period after the final proration factor has been calculated) following the Expiration Date.
As described in "Section 6. Certain U.S. Federal Income Tax Consequences", the number of Shares that we will purchase from a shareholder pursuant to the Offer may affect the United States Federal income tax consequences to the shareholder of the purchase and, therefore, may be relevant to a shareholder's decision whether or not to tender Shares. The Letter of Transmittal affords each shareholder who tenders Shares registered in such shareholder's name directly to the Depositary the opportunity to designate the order of priority in which Shares tendered are to be purchased in the event of proration. In the event the shareholder does not designate the order and fewer than all Shares are purchased due to proration, the Depositary will select the order of Shares purchased.
2. Procedures for Tendering Shares. General. Except as set forth below, in order for Shares to be properly tendered pursuant to the Offer, the Letter of Transmittal, properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal) and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (i) the Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary (including an Agent's Message if the tendering shareholder has not delivered a Letter of Transmittal), in each case on or prior to the Expiration Date, or (ii) the tendering shareholder must comply with the guaranteed delivery procedures described below. No alternative, conditional or contingent tenders will be accepted. The term "Agent's Message" means a message, transmitted by electronic means to, and received by, the Depositary and forming a part of a Book-Entry Confirmation that states that (i) DTC has received an express acknowledgment from the participant in DTC tendering the Shares that are the subject of such Book-Entry Confirmation, (ii) such participant has received and agrees to be bound by the terms of the Letter of Transmittal and (iii) the Company may enforce such agreement against such participant.
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Odd Lot Holders must tender all of their Shares and also complete the section captioned "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery to qualify for the preferential treatment available to Odd Lot Holders as set forth in Section 1.
Shareholders holding their Shares in a brokerage account or otherwise through a broker, dealer, commercial bank, trust company or other nominee, must contact their brokers, dealer, commercial bank, trust company or such other nominee in order to tender their Shares. It is likely that the nominee has established an earlier deadline for you to act to instruct the nominee to accept the Offer on your behalf. Shareholders who hold Shares through nominee shareholders are urged to consult their nominees to determine whether transaction costs may apply if shareholders tender Shares through the nominees and not directly to the Depositary.
Procedure for Plans. A participant in a Plan may instruct such Plan's trustee to tender some or all of the Shares allocated to such participant's account by completing and returning to the agent for such trustee an instruction form in accordance with the instructions in the letter furnished to participants in such Plan, in each case not later than four business days prior to the Expiration Date. All documents furnished to shareholders generally in connection with the Offer will be made available to participants whose Plan accounts are credited with Shares. Participants are urged to read the letter sent to them from their Plan regarding the Offer and the separate instruction form carefully. Participants in the Plans cannot use the Letter of Transmittal to direct the tender of Shares held under their Plan, and must use the instruction form included in the separate letter sent to them. Participants in a Plan who also hold Shares outside such Plan must (i) complete an instruction form according to the instructions in the letter sent to them for Shares held under such Plan and (ii) use the applicable procedures otherwise described in this Offer to Purchase to tender Shares outside such Plan.
Book-Entry Transfer. The Depositary will establish accounts with respect to the Shares at DTC for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in DTC's system may make a book-entry delivery of Shares by causing DTC to transfer such Shares into the Depositary's account in accordance with DTC's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at DTC, either the Letter of Transmittal, properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering shareholder must comply with the guaranteed delivery procedure described below. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be guaranteed by a firm which is a member of the Securities Transfer Agent Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (each, an "Eligible Institution"), except in cases where Shares are tendered (i) by a registered holder (which term, for purposes of this Section 2, will include any participant in the DTC whose name appears on a security position listing as the owner of the Shares) of Shares who has not completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution.
If a Certificate is registered in the name of a person other than the signatory of the Letter of Transmittal, or if payment is to be made, or a Certificate not accepted for payment or not tendered is to be returned, to a person other than the registered holder(s), then the Certificate must be endorsed or accompanied by appropriate share powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Certificate, with the signature(s) on such Certificate or share powers guaranteed by an Eligible Institution. If the Letter of Transmittal or share powers are signed or any Certificate is endorsed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of
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corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to the Offer and the Certificates evidencing such shareholder's Shares are not immediately available or such shareholder cannot deliver the Certificates and all other required documents to the Depositary prior to the Expiration Date, or such shareholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Company, is received prior to the Expiration Date by the Depositary as provided below; and
(iii) the Certificates (or a Book-Entry Confirmation) evidencing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal, properly completed and duly executed, with any required signature guarantees (or, in connection with a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal are received by the Depositary within three NYSE trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day the NYSE is open for business.
The Notice of Guaranteed Delivery may be delivered by mail, express or overnight delivery, or transmitted by telegram or facsimile transmission to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the form of Notice of Guaranteed Delivery made available by the Company.
In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of the Certificates evidencing such Shares, or a Book-Entry Confirmation of the delivery of such Shares, and the Letter of Transmittal, properly completed and duly executed, with any required signature guarantees, and any other documents required by the Letter of Transmittal.
Shareholders may contact the Information Agent or their broker for assistance. The contact information for the Information Agent is on the back cover page of this Offer to Purchase.
THE METHOD OF DELIVERY OF CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Determination of Validity. All questions as to the number of Shares to be accepted, the price to be paid for the Shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Company in its sole discretion, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. The Company also reserves the absolute right to waive any condition of the Offer or any defect or irregularity in the tender of any particular Shares or any particular shareholder, whether or not similar defects or irregularities are waived in the case of other shareholders, and the Company's interpretation of the terms and conditions of the Offer will be final and binding on all persons. No tender of Shares will be deemed to have been
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properly made until all defects and irregularities have been cured or waived to the satisfaction of the Company. We will not be liable for failure to waive any condition of the Offer, or any defect or irregularity in any tender of Shares. Neither the Company, nor any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Our interpretation of the terms of and conditions to the Offer, including the Letter of Transmittal and the instructions thereto, will be final and binding on all persons participating in the Offer.
Tendering Shareholder's Representation and Warranty; Acceptance by the Company Constitutes an Agreement. A tender of Shares pursuant to any of the procedures described above will constitute the tendering shareholder's acceptance of the terms and conditions of the Offer, as well as the tendering shareholder's representation and warranty to the Company that (i) the shareholder has a "net long position," within the meaning of Rule 14e-4 promulgated by the SEC under the Exchange Act, in the Shares or equivalent securities at least equal to the Shares being tendered and (ii) the tender of Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person, directly or indirectly, to tender Shares for that person's own account unless, at the time of tender and at the end of the proration period or period during which Shares are accepted by lot (including any extensions thereof), the person so tendering (i) has a net long position equal to or greater than the amount of (a) Shares tendered or (b) other securities convertible into or exchangeable or exercisable for the Shares tendered and will acquire the Shares for tender by conversion, exchange or exercise and (ii) will deliver or cause to be delivered the Shares in accordance with the terms of the Offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. Our acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and us upon the terms and conditions of the Offer.
Backup Federal Income Tax Withholding. Under the United States Federal income tax backup withholding rules, 28% of the gross proceeds payable to a shareholder or other payee pursuant to the Offer must be withheld and remitted to the United States Treasury, unless the shareholder or other payee provides his or her taxpayer identification number (employer identification number or social security number) to the Depositary and certifies that such number is correct or an exemption otherwise applies under applicable regulations. Therefore, unless an exemption exists and is proven in a manner satisfactory to the Depositary, each tendering shareholder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding. Certain shareholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that shareholder must submit a statement (generally, an IRS Form W-8BEN), signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depositary. See "Important Tax Information" and "Substitute Form W-9" in the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING OF 28% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE TENDER OFFER.
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Other Requirements. If the Certificates which a registered holder wants to surrender have been lost, destroyed or stolen, the shareholder should follow the instructions set forth in the Letter of Transmittal.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL, OR AN AGENT'S MESSAGE, AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST BE DELIVERED TO THE DEPOSITARY AND NOT TO US OR THE INFORMATION AGENT. ANY SUCH DOCUMENTS DELIVERED TO US OR THE INFORMATION AGENT WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT BE DEEMED TO BE PROPERLY TENDERED.
Any determination by the Company as to the validity, form, eligibility and acceptance of Shares for payment, or any interpretation by the Company as to the terms and conditions of the Offer, is subject to applicable law and, if challenged by shareholders in a lawsuit, to the judgment of a court of competent jurisdiction.
3. Withdrawal Rights. Tenders of the Shares made pursuant to the Offer are irrevocable, except that such Shares may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Company pursuant to the Offer, may also be withdrawn at any time after 12:00 midnight, New York City time, on April 19, 2012. If the Company extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to the Company's rights under the Offer, the Depositary may, nevertheless, on behalf of the Company, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described in this Section 3.
For a withdrawal to be effective, a written notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and, if different from that of the person who tendered such Shares, the name of the registered holder of such Shares. If Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Certificates, the serial numbers shown on such Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in "Section 2. Procedures for Tendering Shares", any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Shares or must otherwise comply with DTC's procedures.
Withdrawals of tenders of Shares may not be rescinded, and Shares properly withdrawn will thereafter be deemed not properly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by following the procedures described in "Section 2. Procedures for Tendering Shares", at any time prior to the Expiration Date.
If you wish to withdraw tendered Shares held in a Plan, you must deliver an instruction form with the required information to the agent for the trustee of such Plan. Your Plan may have separate procedures for withdrawing tendered Shares. Participants are urged to read the letter sent to them from their Plan regarding the Offer and the separate instruction form carefully. If you wish to withdraw tendered Shares held in a Plan, you must withdraw all such tendered Shares. If you withdraw Shares held in a Plan, you may retender such Shares by giving instruction to the trustee within the applicable time period as described in "Section 2. Procedures for Tendering Shares".
All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Company, in its sole discretion, whose determination will be final and
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binding. None of the Company, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.
4. Acceptance for Payment and Payment for Shares. Upon the terms and subject to the conditions of the Offer, promptly following the Expiration Date, we will accept for payment and pay for (and thereby purchase) up to 1,000,000 Shares (or such greater number of Shares as we may elect to purchase, subject to applicable law) which are properly tendered and not properly withdrawn on or before the Expiration Date.
In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made promptly, subject in the event of proration to the time necessary to determine the applicable proration factor, but only after timely receipt by the Depositary of (i) the Certificates or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at DTC pursuant to the procedures set forth in "Section 2. Procedures for Tendering Shares", (ii) the Letter of Transmittal, properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent's Message (as defined below) in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal.
In the event of proration, we will determine the proration factor and pay for those tendered Shares accepted for payment promptly after the Expiration Date. However, we do not expect to be able to announce the final results of any proration and commence payment for Shares purchased until a reasonable time after expiration of the period to complete tenders made by Guaranteed Delivery.
For purposes of the Offer, the Company will be deemed to have accepted for payment, and thereby purchased, subject to the Odd Lot priority and proration, Shares properly tendered and not properly withdrawn, if and when the Company gives oral or written notice to the Depositary, as agent for the tendering shareholders, of the Company's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Purchase Price with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Company and transmitting such payments to tendering shareholders whose Shares have been accepted for payment.
Under no circumstances will we pay interest on the Purchase Price, including but not limited to, by reason of any delay in making payment.
We will pay all stock transfer taxes, if any, payable on the transfer to us of Shares purchased pursuant to the Offer. If, however, payment of the Purchase Price is to be made to, or (in the circumstances permitted by the Offer) unpurchased Shares are to be registered in the name of, any person other than the registered holder, or if tendered book-entry accounts are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of all stock transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person will be deducted from the Purchase Price unless satisfactory evidence of the payment of the stock transfer taxes, or exemption from payment of the stock transfer taxes, is submitted.
If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer (including those not purchased because of proration), or if Certificates are submitted evidencing more Shares than are tendered, unless a shareholder specified otherwise in the Letter of Transmittal, Certificates evidencing unpurchased Shares will be returned, without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at DTC pursuant to the procedure set forth in "Section 2. Procedures for
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Tendering Shares", such Shares will be credited to an account maintained at DTC) within a reasonable time after determination of the final proration factor.
5. Purpose of the Offer; Certain Effects of the Offer. The Offer is being made to utilize a portion of the Company's undeployed capital and to provide shareholders with added liquidity. The Company recognizes that its Shares are not widely held and are not regularly followed by many analysts. Based on existing circumstances, the Company believes that it currently has adequate capital and liquidity to fund the maximum amount contemplated by the Offer and to meet its ongoing needs. Accordingly, we have determined that it is in the interest of the Company's shareholders to create a selling opportunity for shareholders through a repurchase by the Company of up to 1,000,000 Shares. The Offer represents the opportunity for us to return capital to shareholders who elect to tender their Shares. The Offer will also afford to shareholders the opportunity to dispose of Shares without the usual transaction costs associated with any market sale; however, if you hold your Shares through a broker, dealer, commercial bank, trust company or other nominee and your nominee tenders Shares on your behalf, your nominee may charge you a fee for doing so.
The Offer will further allow qualifying Odd Lot Holders whose Shares are purchased pursuant to the Offer to avoid the payment of brokerage commissions and any applicable odd-lot discount payable on a sale of Shares in a transaction effected on a securities exchange.
To the extent the purchase of Shares in the Offer results in a reduction in the number of shareholders of record, the costs to the Company for services to shareholders will be reduced. We can give no assurance, however, that we will not issue additional Shares or equity interests in the future. Shareholders may be able to sell non-tendered Shares in the future on the NYSE or otherwise, at a net price which may be higher than the Purchase Price in the Offer. We can give no assurance, however, as to the price at which a shareholder may be able to sell his or her Shares in the future, which may be higher or lower than the Purchase Price paid by us in the Offer.
Shareholders whose Shares are not purchased in the Offer will obtain an increase in their ownership interest in the Company and thus in the Company's future earnings and assets because Shares purchased pursuant to the Offer will be cancelled.
OUR BOARD HAS APPROVED THE OFFER. HOWEVER, NONE OF THE COMPANY, OUR BOARD, THE DEPOSITARY OR THE INFORMATION AGENT MAKES ANY RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AFTER CONSULTING WITH HIS OR HER OWN ADVISORS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. IN DOING SO, SHAREHOLDERS SHOULD READ CAREFULLY THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING THE PURPOSES AND EFFECTS OF THE OFFER. SEE "SECTION 5. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER".
ALL OF OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE ADVISED US THAT THEY DO NOT INTEND TO TENDER ANY SHARES OWNED BY THEM IN THE OFFER. SEE "SECTION 11. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES".
Rule 13e-4 of the Exchange Act generally prohibits us and our affiliates from purchasing any Shares, other than pursuant to the Offer, until at least ten business days after the expiration of the Offer, except pursuant to certain limited exceptions provided in Rule 14e-5 of the Exchange Act. Beginning ten business days after the expiration date of the Offer, we may make Share repurchases from time to time including purchases on the open market and/or in private transactions. The Company has 30,668 Shares remaining under its existing Share repurchase authorization (which will not be reduced by purchases in the Offer). Whether we make additional Share repurchases will depend on many factors, including the number of Shares, if any, that we purchase in the Offer, the number of
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Shares our Board authorizes to be repurchased, our business and financial performance (including our liquidity and alternative uses for our resources) and situation, the business and market conditions at the time, including the price of the Shares, and such other factors as we may consider relevant. Any of these Share repurchases may be on the same terms or on terms that are more or less favorable to the selling shareholders in those transactions than the terms of the Offer.
Shares acquired by the Company pursuant to the Offer will be cancelled. The purchase of up to 1,000,000 Shares pursuant to the Offer will not cause the Shares to be delisted by the NYSE or deregistered under the Exchange Act. See "Section 8. Conditions to the Offer".
Except as disclosed in the Offer or in our filings with the SEC incorporated herein by reference (see "Section 9. Certain Information Concerning the Company"), we do not have any plans, proposals or negotiations under way that would result in: (i) any extraordinary transaction (such as a merger, reorganization or liquidation) involving us or any of our subsidiaries; (ii) any purchase, sale or transfer of a material amount of assets of the Company or any of our subsidiaries; (iii) any change in the Board or management or material term of the employment contract of any executive officer; (iv) any material change in our current dividend rate/policy or capitalization, indebtedness, corporate structure or business; (v) any class of our equity securities ceasing to be authorized to be quoted on the NYSE; (vi) any class of equity securities becoming eligible for termination of registration under Section 12(g); (vii) the suspension of our obligation to file reports under the Exchange Act; (viii) the acquisition or disposition of any securities issued by the Company; or (ix) any changes in articles of incorporation, bylaws or other governing instruments or other actions that could impede the acquisition of control of the Company.
Although we do not currently have plans, other than as described in this Offer to Purchase, that relate to or would result in any of the events discussed above, we continue to evaluate opportunities for increasing shareholder value, and we may undertake or plan actions that relate to or could result in one or more of those events.
6. Certain U.S. Federal Income Tax Consequences. This is a general summary of the material U.S. Federal income tax consequences of the sale of Shares pursuant to the Offer applicable to "U.S. Holders" as defined below. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury Regulations and administrative and judicial interpretations, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all the tax consequences that may be relevant to a particular shareholder in light of the shareholder's particular circumstances. Different rules that are not discussed below may apply to some shareholders such as partnerships (or entities classified as partnerships for U.S. Federal income tax purposes), insurance companies, tax-exempt persons, financial institutions, regulated investment companies, dealers in securities or currencies, persons that hold Shares as a position in a "straddle" or as part of a "hedge", "conversion transaction" or other integrated investment, persons who received Shares as compensation or persons whose functional currency is other than the United States dollar. This summary does not address any state, local or foreign tax or alternative minimum tax considerations that may be relevant to a shareholder's decision to tender Shares pursuant to the Offer. This summary assumes Shares are held as capital assets within the meaning of Section 1221 of the Code.
EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL CONSEQUENCES OF PARTICIPATING IN THE OFFER, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
A "U.S. Holder" is a beneficial owner of Shares who is:
(i) a citizen or resident of the United States;
11
(ii) a corporation (or other business entity treated as a corporation for U.S. Federal income tax purposes) created or organized in or under the laws of the United States any state thereof, or the District of Columbia;
(iii) an estate, the income of which is subject to U.S. Federal income tax regardless of its source; or
(iv) a trust that (A) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons, or (B) otherwise has validly elected to be treated as a U.S. domestic trust for U.S. Federal income tax purposes.
A "Non-U.S. Holder" is a beneficial owner of Shares who is not a U.S. Holder.
Tax Consequences of Offer—Distribution vs. Sale Treatment. The Company's purchase of Shares from a U.S. Holder pursuant to the Offer will be treated either as a sale of the Shares or as a distribution by the Company. The purchase will be treated as a sale if the U.S. Holder meets any of the three tests discussed below. It will be treated as a distribution if the U.S. Holder satisfies none of those tests.
If the purchase of Shares from a U.S. Holder is treated as a sale, the U.S. Holder will recognize gain or loss equal to the difference between the amount of cash received by the U.S. Holder and the U.S. Holder's tax basis in the Shares sold. The gain or loss will be capital gain or loss and will be long-term capital gain or loss if the Shares were held more than one year. A U.S. Holder must calculate gain or loss separately for each block of Shares that he or she owns. A U.S. Holder may be able to designate which blocks and the order of such blocks of Shares to be tendered pursuant to the Offer. We believe that we are currently a "U.S.-owned foreign corporation" for U.S. Federal income tax purposes. As such, the gain or loss will be U.S. source for foreign tax credit purposes.
If the purchase of Shares from a U.S. Holder is treated as a distribution by the Company, the full amount of cash received by the particular U.S. Holder for the Shares (without any offset for the U.S. Holder's tax basis in the purchased Shares) will be treated as a dividend to the extent of the Company's current and accumulated earnings and profits allocable to the distribution. Provided certain holding period requirements are satisfied, non-corporate holders generally will be subject to United States Federal income tax at a maximum rate of 15% on amounts treated as dividends. The tax basis of the U.S. Holder's sold Shares will be added to the tax basis of the remaining Shares. The Company believes that it has sufficient current and accumulated earnings and profits so that all purchases treated as distributions will be treated as dividends and therefore taxed as ordinary income. Any dividends will generally be treated as U.S. source for foreign tax credit purposes. To the extent, if any, payments made by the Company exceed a U.S. Holder's allocable share of our current and accumulated earnings and profits, the distribution will first be treated as a non-taxable return of capital, causing a reduction in the U.S. Holder's adjusted basis in his or her Shares, and any amounts in excess of the U.S. Holder's adjusted basis will constitute capital gain. Shareholders should consult their tax advisors concerning the rules discussed in this paragraph in light of their circumstances.
Determination of Sale or Distribution Treatment. The Company's purchase of Shares pursuant to the Offer will be treated as a sale of the Shares by a U.S. Holder if:
(a) the purchase completely terminates the U.S. Holder's equity interest in the Company;
(b) the receipt of cash by the U.S. Holder is "not essentially equivalent to a dividend"; or
(c) as a result of the purchase there is a "substantially disproportionate" reduction in the U.S. Holder's equity interest in the Company.
If none of these tests are met with respect to a particular U.S. Holder, then the Company's purchase of Shares from that U.S. Holder pursuant to the Offer will be treated as a distribution.
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In applying these tests, the constructive ownership rules of Section 318 of the Code apply. Thus, a U.S. Holder is treated as owning not only Shares actually owned by the U.S. Holder but also Shares actually (and in some cases constructively) owned by others. Under the constructive ownership rules, a U.S. Holder will be considered to own Shares owned, directly or indirectly, by certain members of the U.S. Holder's family and certain entities (such as corporations, partnerships, trusts and estates) in which the U.S. Holder has an equity interest, as well as Shares that the U.S. Holder has an option to purchase.
It may be possible for a tendering U.S. Holder to satisfy one of these three tests by contemporaneously selling or otherwise disposing of all or some of the Shares that such U.S. Holder actually or constructively owns that are not purchased pursuant to the Offer. Correspondingly, a tendering U.S. Holder may not be able to satisfy one of these three tests because of contemporaneous acquisitions of Shares by that U.S. Holder or a related party whose Shares are attributed to such U.S. Holder. Shareholders should consult their tax advisors regarding the tax consequences of such sales or acquisitions in their particular circumstances.
Complete Termination. A purchase of Shares pursuant to the Offer will result in a "complete termination" of the U.S. Holder's interest in the Company if, immediately after the sale, either:
(a) the U.S. Holder owns, actually and constructively, no Shares; or
(b) the U.S. Holder actually owns no Shares and effectively waives any constructively owned Shares under the procedures described in Section 302(c)(2) of the Code. If a U.S. Holder desires to file such a waiver, the U.S. Holder should consult his or her own tax advisor.
Not Essentially Equivalent to a Dividend. A purchase of Shares pursuant to the Offer will be treated as "not essentially equivalent to a dividend" if it results in a "meaningful reduction" in the selling U.S. Holder's proportionate interest in the Company. Whether a U.S. Holder meets this test will depend on relevant facts and circumstances. The Internal Revenue Service (the "IRS") has held in a published ruling that, under the particular facts of that ruling, a small reduction in the percentage share ownership of a small minority U.S. Holder in a publicly and widely held corporation who did not exercise any control over corporate affairs constituted a "meaningful reduction".
In measuring the change, if any, in a U.S. Holder's proportionate interest in the Company, the meaningful reduction test is applied by taking into account all Shares that the Company purchases pursuant to the Offer, including Shares purchased from other U.S. Holders.
If, taking into account the constructive ownership rules of Section 318 of the Code, a U.S. Holder owns Shares that constitute only a minimal interest in the Company and does not exercise any control over the affairs of the Company, any reduction in the U.S. Holder's percentage ownership interest in the Company should be a "meaningful reduction". Such selling U.S. Holder should, under these circumstances, be entitled to treat his or her sale of Shares pursuant to the Offer as a sale for U.S. Federal income tax purposes. Shareholders should consult their own tax advisors with respect to the application of the "not essentially equivalent to a dividend" test to their particular situation and circumstances.
Substantially Disproportionate. A purchase of Shares pursuant to the Offer will be "substantially disproportionate" as to a U.S. Holder if (i) the percentage of the then outstanding Shares actually and constructively owned by such U.S. Holder immediately after the purchase is less than 80% of the percentage of the outstanding Shares actually and constructively owned by such U.S. Holder immediately before its sale of Shares, and (ii) the percentage of our outstanding voting stock actually and constructively owned by such U.S. Holder immediately after the purchase is less than 80% of the percentage of our outstanding voting stock actually and constructively owned by such U.S. Holder immediately before its sale of Shares. Shareholders should consult their own tax advisors with respect
13
to the application of the "substantially disproportionate" test to their particular situation and circumstances.
The Company Cannot Predict Whether There Will Be Sale or Distribution Treatment. The Company cannot predict whether or the extent to which the Offer will be oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant to the Offer will cause the Company to accept fewer Shares than are tendered. Consequently, the Company can give no assurance that a sufficient number of any U.S. Holder's Shares will be purchased pursuant to the Offer to ensure that such purchase will be treated as a sale, rather than as a distribution, for U.S. Federal income tax purposes under the rules discussed above.
Corporate Dividends-received Deduction. In the case of a corporate U.S. Holder, if cash received pursuant to the Offer is treated as a dividend, the resulting dividend income will not qualify for the dividends-received deduction otherwise generally available to corporate U.S. Holders, except to the extent from earnings and profits accumulated before the Company was organized under the laws of Bermuda in 1999. Corporate U.S. Holders may be eligible for the dividends-received deduction to the extent dividends are paid out of such earnings and profits. The dividends-received deduction is subject to certain limitations and may not be available if the corporate U.S. Holder does not satisfy certain holding period requirements with respect to the Shares or if the Shares are treated as "debt financed portfolio stock". Corporate U.S. Holders are urged to consult with their own tax advisors regarding the availability of the dividends-received deduction and the likelihood that the dividend would be treated as an "extraordinary dividend" under Section 1059(a) of the Code, and the tax consequences to them therefrom.
Consequences to Shareholders Who Do Not Sell Shares Pursuant to the Offer. Shareholders (including Non-U.S. Holders) who do not sell Shares pursuant to the Offer will not incur any tax liability as a result of the consummation of the Offer.
Taxation of Non-U.S. Holders. Non-U.S. Holders will generally not be subject to U.S. Federal income taxation as a result of selling Shares pursuant to the Offer. The rules governing U.S. Federal income taxation of the receipt by Non-U.S. Holders of cash pursuant to the Offer, however, are complex and each Non-U.S. Holder should consult his or her own tax advisors concerning the application of U.S. Federal, state, local and foreign income tax laws to that shareholder.
Backup Federal Income Tax Withholding. See Section 2 with respect to the application of backup United States Federal income tax withholding.
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To prevent backup withholding and possible penalties, each shareholder should complete the substitute Form W-9 included in the Letter of Transmittal. In order to qualify for an exemption from backup withholding, a Non-U.S. Holder must submit a properly executed IRS Form W-8BEN or other applicable form to the Depositary. Any amount paid as backup withholding will be creditable against the shareholder's U.S. Federal income tax liability provided that the required information is timely furnished to the IRS.
7. Price Range of Shares; Dividends. The Shares are listed and traded on the NYSE under the symbol "WTM". The following table sets forth, for the quarters indicated, the high and low sales prices per Share on the NYSE as reported by published financial sources:
NYSE:
|
High | Low | |||||
|---|---|---|---|---|---|---|---|
2010: |
|||||||
First Quarter |
359.18 | 314.18 | |||||
Second Quarter |
363.37 | 306.01 | |||||
Third Quarter |
333.88 | 294.91 | |||||
Fourth Quarter |
338.65 | 307.29 | |||||
2011: |
|||||||
First Quarter |
381.25 | 338.89 | |||||
Second Quarter |
428.25 | 343.63 | |||||
Third Quarter |
438.25 | 377.00 | |||||
Fourth Quarter |
453.79 | 395.03 | |||||
2012: |
|||||||
First Quarter (through February 23, 2012) |
504.03 | 436.54 | |||||
On February 23, 2012, the last reported closing sale price per Share as reported on the NYSE was $496.15. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
Historically, dividends have been declared and paid on an annual basis. On February 23, 2012, the Board declared an annual dividend of $1.00 per Share, payable April 4, 2012, to shareholders of record as of March 26, 2012. There can be no assurance that we will pay a regular annual dividend in the future. The amount and timing of all future dividend payments is subject to the discretion of the Board and will depend upon business conditions, results of operations, the Company's financial condition and other factors.
8. Conditions to the Offer. Notwithstanding any other provision of the Offer, and in addition to (and not in limitation of) the Company's right to extend, amend or terminate the Offer as set forth in Section 14, the Company shall not be required to accept for payment or pay for any Shares tendered, or may postpone the acceptance for payment of or the payment for Shares tendered, subject to Rule 13e-4(f) promulgated under the Exchange Act, if, before acceptance for payment of or payment for any such Shares, any of the following has occurred:
- •
- there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency or authority or tribunal or any other person, domestic or foreign, before any court or governmental, regulatory or administrative authority, agency or tribunal, domestic, foreign or supranational, that (i) directly or indirectly challenges, makes illegal, or delays or otherwise directly or indirectly restrains, prohibits or otherwise adversely affects the making of the Offer or the acquisition of Shares pursuant to the Offer, or otherwise relates in any manner to the Offer; or (ii) we reasonably determine does or could materially and adversely affect the business, condition (financial or otherwise), income, assets, operations or prospects of the Company and its subsidiaries or
15
- •
- there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation,
judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or the Company or any of its subsidiaries, by any
court or any government or governmental, regulatory or administrative authority, agency or tribunal, domestic, foreign or supranational, that (i) directly or indirectly makes the acceptance for
payment of, or payment for, some or all the Shares illegal or otherwise restricts or prohibits consummation of the Offer; (ii) directly or indirectly delays or restricts the ability of the
Company, or renders the Company unable, to accept for payment, or pay for, some or all the Shares; or (iii) in our reasonable judgment does or could materially and adversely affect the
business, condition (financial or otherwise), income, assets, operations or prospects of the Company and its subsidiaries or otherwise materially impair the contemplated future conduct of the business
of the Company or any of its principal subsidiaries or materially impair the benefits of the Offer to the Company;
- •
- there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any
United States national securities exchange or in the over-the-counter market (excluding any coordinated trading halt triggered solely as a result of a specified decrease in a
market index); (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, the European Union or Bermuda; (iii) the commencement
of a war, armed hostilities, an act of terrorism, or other international or national crisis directly or indirectly involving the United States, the European Union or Bermuda; (iv) any
limitation (whether or not mandatory) by any governmental, regulatory or administrative agency or authority on, or any event that we reasonably determine might affect, the extension of credit by banks
or other lending institutions in the United States, the European Union or Bermuda, (v) any change in the general political, market, economic or financial conditions in the United States or
abroad that we reasonably determine does or could materially and adversely affect the business, condition (financial or otherwise), income, assets, operations or prospects of the Company and its
subsidiaries or the trading in the Shares or otherwise materially impair the contemplated future conduct of the business of the Company or any of its principal subsidiaries or materially impair the
benefits of the Offer to the Company; or (vi) in the case of any of the foregoing existing at the time of the commencement of the Offer, in our reasonable judgment, a material escalation,
acceleration or worsening thereof;
- •
- there shall have occurred any decline of more than 10% in the market price for the Shares or in the Dow Jones Industrial
Average, New York Stock Exchange Composite Index, NASDAQ Composite Index or the Standard and Poor's 500 Index, as measured in each case from the close of business on February 23, 2012;
- •
- there shall have occurred a material change in U.S. or any other currency exchange rates or a suspension of or limitation
on the markets for such currencies that we reasonably determine does or could materially and adversely affect the business, condition (financial or otherwise), income, assets, operations or prospects
of the Company or any of its subsidiaries or materially impair the future conduct of the business of the Company or any of its principal subsidiaries or materially impair the benefits of the Offer to
the Company;
- •
- after February 23, 2012, any other change, event or development shall occur or be threatened or be reasonably anticipated by the Company that we reasonably determine does or could materially and adversely affect the business, condition (financial or otherwise), income, assets, operations or prospects of the Company and its subsidiaries or otherwise materially impair the
otherwise materially impair the contemplated future conduct of the business of the Company or any of its principal subsidiaries or materially impair the benefits of the Offer to the Company;
16
- •
- legislation amending the Code (as defined in Section 6) shall have been passed by either the U.S. House of
Representatives or the Senate or pending before the U.S. House of Representatives or the Senate or any committee thereof that we reasonably determine could materially and adversely change the tax
consequences of the transaction contemplated by the Offer to the Company or any of its subsidiaries;
- •
- any person, entity or group shall have filed a Notification and Report Form under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, or made a public announcement reflecting an intent to acquire the Company or any of its subsidiaries or a material portion of their respective assets or securities;
- •
- after February 23, 2012, any tender or exchange offer with respect to the Shares (other than the Offer), or any
merger, acquisition, business combination or other similar transaction with or involving the Company or any of its subsidiaries, shall have been proposed, announced or made by any person or entity; or
- •
- we reasonably determine that the purchase of Shares pursuant to the Offer will cause either (i) the Shares to be held of record by less than 300 persons; (ii) delisted from the NYSE or (iii) eligible for deregistration under the Exchange Act.
contemplated future conduct of the business of the Company or any of its principal subsidiaries or materially impair the benefit of the Offer to the Company;
The foregoing conditions are for the sole benefit of the Company and may be asserted by us regardless of the circumstances (including any action or inaction by the Company) giving rise to any such condition and any such condition may be waived by us, in whole or in part, at any time and from time to time in our sole discretion. In certain cases, waiver of a condition to the Offer would require an extension of the Offer. See "Section 14. Extension of the Offer; Termination; Amendment".
The Company's failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts or circumstances; and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. At or before the expiration of the Offer, all of the conditions to the Offer, other than those requiring necessary government approval, must have been satisfied or waived. Any determination by the Company concerning the events described above will be final and binding on all parties.
9. Certain Information Concerning the Company. White Mountains is an exempted Bermuda limited liability company whose principal businesses are conducted through its property and casualty insurance and reinsurance subsidiaries and affiliates. The Company's headquarters are located at 14 Wesley Street, Hamilton, Bermuda HM 11, its principal executive office is located at 80 South Main Street, Hanover, New Hampshire 03755-2053 and its registered office is located at Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11.
Where You Can Find More Information. The Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is required to file periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. Such reports, proxy statements and other information can be inspected and copied at the SEC's public reference rooms in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. The Company's filings are also available to the public on the SEC Internet site (http://www.sec.gov).
Incorporation by Reference. The rules of the SEC allow us to "incorporate by reference" information into this document, which means that we can disclose important information to you by
17
referring you to another document filed separately with the SEC. The following documents contain important information about us and we incorporate them by reference:
- •
- Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed on
February 28, 2011;
- •
- Quarterly Reports on Form 10-Q for the quarter ended March 31, 2011, filed on April 29,
2011, for the quarter ended June 30, 2011, filed on July 29, 2011 and for the quarter ended September 30, 2011, filed on October 28, 2011;
- •
- Current Reports on Form 8-K filed on February 4, 2011, March 1, 2011, April 29,
2011, May 18, 2011, May 31, 2011, June 22, 2011, July 29, 2011, August 17, 2011, September 23, 2011, October 7, 2011, October 12, 2011,
October 28, 2011, November 18, 2011, November 22, 2011 and February 3, 2012; and
- •
- Definitive Proxy Statement for our 2011 annual meeting of shareholders, filed on April 4, 2011.
You can obtain any of the documents incorporated by reference in this document from the SEC's website at the address described above. You may also request a copy of these filings, at no cost, by writing or telephoning the Information Agent at its address and telephone number set forth below.
10. Source and Amount of Funds. Assuming that the maximum number of Shares are tendered in the Offer, the aggregate purchase price for the Shares will be $500,000,000. The Company intends to fund the purchase of Shares with available cash, including cash from the sale of liquid investments.
11. Interests of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares. As of February 23, 2012 after our purchase of 89,279 Shares from Berkshire Hathaway Inc., there were 7,455,585 Shares outstanding. Accordingly, the 1,000,000 Shares we are seeking purchase through this Offer represent approximately 13.4% of the Shares outstanding as of such date.
As of February 23, 2012, our directors and executive officers as a group (15 persons) beneficially owned an aggregate of approximately 392,264 Shares (including Shares that are subject to the proxy described above), representing approximately 5.2% of the total number of outstanding Shares. All of our directors and executive officers have advised us that they do not intend to tender any of their Shares in the Offer. Accordingly, assuming we purchase 1,000,000 Shares in the Offer, the proportional holdings of our directors and executive officers will increase to approximately 6.1%. However, our directors and executive officers may, in compliance with applicable law, sell their Shares in open market transactions at prices that may or may not be more favorable than the Purchase Price to be paid to our shareholders in the Offer.
Schedule I provides information with respect to the beneficial ownership of our Common Shares by (i) each of our directors, (ii) each of our executive officers and (iii) all directors and executive officers as a group. We based the share amounts on each person's beneficial ownership of our Common Shares as of February 23, 2012.
Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of Shares beneficially owned by a person and the percentage ownership of that person, Shares subject to options held by that person that are currently exercisable or exercisable within 60 days of the date of this Offer to Purchase. These Shares, however, are not deemed outstanding for purposes of computing percentage ownership of each other shareholder.
Based on our records and on information provided to us by our directors, executive officers, affiliates and subsidiaries, neither we nor our directors, executive officers, affiliates or subsidiaries have effected any transactions in the Shares during the 60 days prior to the date hereof, except as follows:
- •
- On December 27, 2011 Raymond Barrette made a gift of 725 Shares to a family charitable foundation in which Raymond Barrette disclaims beneficial ownership.
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- •
- On January 12, 2012, Raymond Barrette, J. Brian Palmer and Robert Seelig acquired 2.701, 1.795 and
3.366 Shares, respectively, through a regular purchase in the OneBeacon 401(k) Savings and Employee Stock Ownership Plan, at a price of $462.84 per Share.
- •
- On January 26, 2012, Raymond Barrette, J. Brian Palmer and Robert Seelig acquired 2.755, 1.831 and
3.433 Shares, respectively, through a regular purchase in the OneBeacon 401(k) Savings and Employee Stock Ownership Plan, at a price of $453.75 per Share.
- •
- On February 9, 2012, Raymond Barrette, J. Brian Palmer and Robert Seelig acquired 2.632, 1.750 and 3.280 Shares,
respectively, through a regular purchase in the OneBeacon 401(k) Savings and Employee Stock Ownership Plan, at a price of $474.86 per Share.
- •
- On February 14, 2012, Morgan W. Davis purchased 800, 100, 1,500, 99 and 501 Shares on the open market at
prices of $463.00 $464.00, $464.05, $464.25 and $465.00 per Share, respectively.
- •
- On February 23, 2012, Raymond Barrette, J. Brian Palmer and Robert Seelig acquired 2.519, 1.674 and 3.140 Shares,
respectively, through a regular purchase in the OneBeacon 401(k) Savings and Employee Stock Ownership Plan, at a price of $496.15 per Share.
- •
- On February 22, 2012, the Company purchased 89,279 Shares from Berkshire Hathaway Inc., at a price of $500.00 per
Share.
- •
- On February 22, 2012, Allan Waters acquired 6,122 Shares as a result of the settlement of a performance share
award.
- •
- On February 22, 2012, Robert Seelig acquired 1,000 Shares in satisfaction of a performance share award.
- •
- The Company has purchased Shares in a number of transactions pursuant to the Company's 10b5-1 plan, which transactions are listed on Schedule II.
On January 22, 2007, John J. and Dorothy M. Byrne irrevocably granted to Raymond Barrette a full proxy to vote certain Shares owned by them which, as of October 13, 2011, covered 687,117 Shares. The proxy expired on January 1, 2012.
Mr. Barrette currently owns 125,000 outstanding options. Mr. Barrette may exercise these options at a strike price of $742 per share.
We generally have structured our long-term incentive compensation as performance shares, restricted shares or performance units. At our parent company, long-term incentive compensation is typically in the form of Company performance shares and restricted shares, which reward company-wide performance. The number of performance shares earned, which can be from 0% to 200% of the target number granted, is tied to our after-tax annual growth in intrinsic business value per share (as defined by the compensation committee of the Board (the "Compensation Committee")) over the performance cycle. Earned performance shares are typically paid in cash, but may be paid in Shares at the discretion of the Compensation Committee. Performance shares, restricted shares and/or performance units are typically granted annually, and performance is tied to a three-year period.
We have no long-term employment agreements with our executive officers although, from time to time, we have entered into short-term arrangements with newly hired executives governing their compensation and severance during up to their first three years with the Company. No such arrangements are currently in effect with our executive officers.
If any of our most senior executives were to retire, we generally will consider entering into a one to three year consulting agreement with the executive, which would permit the executive to earn some or all of such executive's long-term incentive compensation then outstanding.
19
We have no standalone change in control agreements with our executive officers. However, under our long-term incentive plans, if a change in control of the Company (or a business unit, as applicable) were to occur, certain events, such as involuntary or constructive employment termination or amendments to our incentive plans which are materially adverse to its participants, may cause stock options to become fully exercisable, restricted shares to become immediately vested and performance shares and performance units to become payable in full or in part. Our long-term incentive compensation plans do not provide for tax gross-ups for excess parachute payments that may result from a change in control.
The Plans are tax-qualified retirement plan under Section 401(a) of the Code. The Plans each contain cash deferred arrangement under Section 401(k) of the Code. Participants in each Plan may direct the trustee of such Plan to invest funds in any investment option available under such Plan. The Plans provide employees with a menu of investment options, including Shares.
12. Certain Legal Matters. The Company is not aware of any license or regulatory permit that appears to be material to its business that might be adversely affected by its acquisition of Shares as contemplated in the Offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic, foreign or supranational, that would be required for the Company's acquisition or ownership of Shares pursuant to the Offer. Should any such approval or other action be required, the Company currently contemplates that it will seek such approval or other action. The Company cannot predict whether it may determine that it is required to delay the acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to the Company's business. The Company intends to make all required filings under the Exchange Act.
As of the date of this Offer to Purchase, there are no material legal proceedings relating to the Offer.
The Company's obligation under the Offer to accept Shares for payment is subject to certain conditions. See "Section 8. Conditions to the Offer".
13. Effects of the Offer on the Market for Shares; Registration under the Exchange Act. The purchase by the Company of Shares under the Offer will reduce our "public float" (the number of Shares owned by non-affiliate shareholders and available for trading in the securities markets). This reduction in our public float may result in lower stock prices and/or reduced liquidity in the trading market for the Shares following completion of the Offer. In addition, the Offer may reduce the number of White Mountains shareholders. As of February 23, 2012, after our purchase of 89,279 Shares from Berkshire Hathaway Inc., there were 7,455,585 Shares outstanding. Shareholders may be able to sell non-tendered Shares in the future on the NYSE or otherwise, at a net price higher or lower than the Purchase Price in the Offer. We can give no assurance, however, as to the price at which a shareholder may be able to sell such Shares in the future.
We anticipate that there will be a sufficient number of Shares outstanding and publicly traded following completion of the Offer to ensure a continued trading market for such Shares. Based upon published guidelines of the NYSE, we do not believe that our purchase of Shares under the Offer will cause the remaining outstanding Shares to be delisted from the NYSE.
The Shares are currently "margin securities" under the rules of the Federal Reserve Board. This classification has the effect, among other things, of allowing brokers to extend credit to their customers using the Shares as collateral. The Company believes that, following the purchase of Shares under the Offer, the Shares remaining outstanding will continue to be margin securities for purposes of the Federal Reserve Board's margin rules and regulations.
20
The Shares are registered under the Exchange Act, which requires, among other things, that we furnish certain information to our shareholders and the SEC and comply with the SEC's proxy rules in connection with meetings of our shareholders. We believe that our purchase of Shares under the Offer will not result in the Shares becoming eligible for deregistration under the Exchange Act.
14. Extension of the Offer; Termination; Amendment. Subject to the terms and conditions of the Offer, the Company expressly reserves the right, in its sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in "Section 8. Conditions to the Offer" shall have occurred or shall be deemed by the Company to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of any Shares by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. During any such extension, all Shares previously tendered and not purchased or withdrawn will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in "Section 3. Withdrawal Rights".
The Company also expressly reserves the right, in its sole discretion, to withdraw or terminate the Offer and not accept for payment or pay for any Shares not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for Shares upon the occurrence of any of the conditions specified in Section 8 by giving oral or written notice of the termination or postponement to the Depositary and making a public announcement of the termination or postponement. Additionally, the Company expressly reserves the right, subject to applicable law, to postpone payment for Shares under circumstances including but not limited to the occurrence of any of the conditions specified in "Section 8. Conditions to the Offer" by notifying the Depositary and making a public announcement thereof. However, the ability of the Company to delay the payment for Shares which the Company has accepted for payment is limited by Rule 13e-4(f)(5) under the Securities Exchange Act of 1934, as amended, which requires that bidder pay the consideration offered or return the securities deposited by, or on behalf of, holders of securities promptly after the termination or withdrawal of the Offer.
If the Company is delayed in its payment for the Shares or is unable to pay for the Shares pursuant to the Offer for any reason, then, without prejudice to the Company's rights under the Offer, the Depositary may retain tendered Shares on behalf of the Company, and such Shares may not be withdrawn except to the extent tendering shareholders are entitled to withdrawal rights as described in "Section 3. Withdrawal Rights".
Subject to compliance with applicable law, the Company further reserves the right, in its sole discretion, and regardless of whether or not any of the events set forth in "Section 8. Conditions to the Offer" shall have occurred or shall be deemed by the Company to have occurred, to amend the Offer in any respect (including by decreasing or increasing the consideration offered in the Offer or by increasing or decreasing the number of Shares being sought in the Offer). Amendments to the Offer may be made at any time, effected by public announcement thereof. Such announcement, in the case of an extension, is to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Any disclosure of a material change in the information published, sent or given to shareholders will be disseminated promptly to shareholders in a manner reasonably calculated to inform shareholders of such change to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) promulgated under the Exchange Act. Without limiting the manner in which the Company may choose to make a public announcement pursuant to or concerning the Offer, except as required by applicable law, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Wall Street Journal, the New York Times or another comparable service.
If the Company makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Company will extend the Offer to the extent required by Rules 13e-4(e)(3) and 13e-4(f)(1) under the Exchange Act. If we make any change
21
to the purchase price range at which we are offering to purchase Shares in the Offer, decrease the number of Shares purchasable in the Offer or increase the number of Shares sought in the Offer by an amount exceeding 2% of our outstanding Shares, the Offer must remain open a minimum of ten business days from and including the date such change is first published, sent or given to shareholders in the manner specified in this Section 14. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or change in percentage of Shares sought, will depend upon the facts and circumstances then existing, including the relative materiality of the changed terms or information. In a public release, the SEC has stated its views that an offer must remain open for a minimum period of time following a material change in the terms of the Offer and that waiver of a material condition is a material change in the terms of the Offer. The release states that an offer should remain open for a minimum of five business days from the date a material change is first published or sent or given to security holders and that, if material changes are made with respect to information not materially less significant than the offer price and the number of Shares being sought, a minimum of 10 business days may be required to allow for adequate dissemination to shareholders and investor response. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or United States Federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The requirements to extend the Offer do not apply to the extent that the number of business days remaining between the occurrence of the change and the then-scheduled Expiration Date equals or exceeds the minimum extension period that would be required because of such amendment.
15. Fees and Expenses. Except as set forth below, the Company will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer.
We have retained D.F. King & Co., Inc. to act as Information Agent in connection with the Offer. The Information Agent will assist shareholders who request assistance in connection with the Offer and may request brokers, dealers and other nominee shareholders to forward material relating to the Offer to beneficial owners for which they act as nominees. D.F. King & Co., Inc. will receive reasonable and customary compensation for its services in connection with the Offer and will be reimbursed for reasonable expenses, including the reasonable fees and expenses of counsel. The Company has agreed to indemnify D.F. King & Co., Inc. against certain liabilities which could occur in connection with the Offer, including certain liabilities under the Federal securities laws. D.F. King & Co., Inc. has not been retained and is not authorized to make solicitations or recommendations in connection with the Offer in its role as Information Agent.
We have also retained Computershare to act as Depositary in connection with the Offer. Computershare, in its capacity as Depositary, will receive reasonable and customary compensation for its services in connection with the Offer and will be reimbursed by us for reasonable expenses, including reasonable fees and expenses of counsel. The Company has agreed to indemnify Computershare against certain liabilities which could occur in connection with the Offer, including liabilities under the Federal Securities Laws.
The Company will not pay any fees or commissions to any broker, dealer, commercial bank, trust company or other person (other than fees to the the Information Agent and the Depositary), for soliciting Shares pursuant to the Offer. The Company will, however, on request, reimburse such persons for customary handling and mailing expenses incurred in forwarding materials in respect of the Offer to the beneficial owners for which they act as nominees. No broker, dealer, commercial bank or trust company has been authorized to act as an agent for the Company, the Information Agent or the Depositary for the purpose of the Offer. The Company will not pay (or cause to be paid) any share transfer taxes on its purchase of Shares pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal.
22
Certain officers and employees of the Company may render services in connection with the Offer, but they will not receive any additional compensation for such services.
16. Miscellaneous. The Offer is being made to all holders of Shares. The Company is not aware of any jurisdiction where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Company becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Company will make a good faith effort to comply with any such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Company cannot comply with any such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Company by one or more registered brokers or dealers licensed under the laws of such jurisdiction.
OUR BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, NONE OF THE COMPANY, OUR BOARD OF DIRECTORS, THE DEPOSITARY OR THE INFORMATION AGENT MAKES ANY RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE HIS OR HER OWN DECISION AFTER CONSULTING WITH HIS OR HER OWN ADVISORS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. IN DOING SO, SHAREHOLDERS SHOULD READ CAREFULLY THE INFORMATION IN THIS OFFER TO PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING THE PURPOSES AND EFFECTS OF THE OFFER. SEE "SECTION 5. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER". YOU SHOULD READ CAREFULLY THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF TRANSMITTAL, INCLUDING OUR REASONS FOR MAKING THE OFFER. SEE "SECTION 5. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER".
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. IF MADE OR GIVEN, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OUR BOARD OF DIRECTORS, THE DEPOSITARY OR THE INFORMATION AGENT.
The Company has filed with the SEC a Tender Offer Statement on Schedule TO, together with all exhibits thereto, pursuant to Rule 13e-4 under the Exchange Act, furnishing certain additional information with respect to the Offer. Such Schedule and any amendments thereto, including exhibits, may be inspected and copies may be obtained from the offices of the SEC in the manner set forth in "Section 9. Certain Information Concerning the Company" (except that they will not be available at the regional offices of the SEC).
White Mountains Insurance Group, Ltd.
February 24, 2012
23
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY
Directors and Executive Officers of the Company. Set forth in the table below are the names, titles, business addresses, telephone numbers and beneficial ownership of Shares information of the directors and executive officers of the Company. Each person identified below, except for the Company and Yves Brouillette (Canadian citizen), is a United States citizen.
The address and telephone number of each person listed is c/o White Mountains Insurance Group, Ltd., 80 South Main Street, Hanover, New Hampshire 03755, telephone (603) 640-2200.
| NAME | TITLE | AGGREGATE NUMBER OF BENEFICIALLY OWNED SHARES |
PERCENTAGE OF TOTAL BENEFICIALLY OWNED SHARES |
|||||
|---|---|---|---|---|---|---|---|---|
| Raymond Barrette | Director, Chairman and CEO | 223,175 | 2.9% | |||||
Yves Brouillette |
Director |
4,228 |
* |
|||||
Reid Campbell |
Managing Director, White Mountains Capital |
15,854 |
* |
|||||
Howard L. Clark, Jr. |
Director |
770 |
* |
|||||
Morgan W. Davis |
Director |
24,090 |
* |
|||||
David T. Foy |
Chief Financial Officer |
21,194 |
* |
|||||
A. Michael Frinquelli |
Director |
1,541 |
* |
|||||
John D. Gillespie |
Director |
52,439 |
* |
|||||
Edith E. Holiday |
Director |
802 |
* |
|||||
T. Michael Miller |
Chief Executive Officer, OneBeacon |
5 |
* |
|||||
J. Brian Palmer |
Chief Accounting Officer |
4,002 |
* |
|||||
G. Manning Rountree |
Managing Director, White Mountains Capital |
9,155 |
* |
|||||
Robert L. Seelig |
Managing Director and General Counsel |
16,133 |
* |
|||||
Lowndes A. Smith |
Director |
1,602 |
* |
|||||
Allan L. Waters |
Director |
17,274 |
* |
|||||
Total |
392,264 |
5.2% |
||||||
* Less than 1%.
24
SCHEDULE II
INFORMATION CONCERNING SHARE PURCHASES PURSUANT TO THE
COMPANY'S 10b5-1 PLAN
Date
|
Number of Shares | Price | |||||
|---|---|---|---|---|---|---|---|
| 12/27/2010 | 900 | 450.90 | |||||
| 12/28/2010 | 800 | 450.58 | |||||
| 12/29/2010 | 1,260 | 449.71 | |||||
| 12/30/2010 | 1,090 | 452.48 | |||||
| 1/3/2012 | 2,708 | 456.26 | |||||
| 1/4/2012 | 2,419 | 454.85 | |||||
| 1/5/2012 | 2,830 | 452.53 | |||||
| 1/6/2012 | 2,603 | 445.58 | |||||
| 1/9/2012 | 2,510 | 447.15 | |||||
| 1/10/2012 | 1,410 | 457.41 | |||||
| 1/11/2012 | 1,500 | 459.63 | |||||
| 1/12/2012 | 1,800 | 460.78 | |||||
| 1/13/2012 | 2,601 | 457.03 | |||||
| 1/17/2012 | 2,000 | 446.50 | |||||
| 1/18/2012 | 2,206 | 444.06 | |||||
| 1/19/2012 | 2,020 | 452.54 | |||||
| 1/20/2012 | 2,200 | 449.30 | |||||
| 1/23/2012 | 1,423 | 449.43 | |||||
| 1/24/2012 | 1,918 | 447.92 | |||||
| 1/25/2012 | 2,000 | 446.35 | |||||
| 1/26/2012 | 2,013 | 452.11 | |||||
| 1/27/2012 | 2,100 | 456.01 | |||||
| 1/30/2012 | 1,500 | 458.31 | |||||
| 1/31/2012 | 2,200 | 449.47 | |||||
| 2/1/2012 | 2,100 | 469.34 | |||||
| 2/2/2012 | 1,306 | 454.45 | |||||
| 2/3/2012 | 2,100 | 450.98 | |||||
| 2/6/2012 | 1,967 | 473.03 | |||||
| 2/7/2012 | 2,000 | 471.27 | |||||
| 2/8/2012 | 2,200 | 470.70 | |||||
| 2/9/2012 | 2,100 | 472.96 | |||||
| 2/10/2012 | 2,110 | 471.00 | |||||
| 2/13/2012 | 2,300 | 467.91 | |||||
| 2/15/2012 | 1,989 | 474.01 | |||||
| 2/16/2012 | 2,191 | 475.86 | |||||
| 2/17/2012 | 2,134 | 481.29 | |||||
| 2/21/2012 | 1,892 | 482.61 | |||||
25
The Depositary for the Offer is:
Computershare Trust Company, N.A.
| By First Class, Registered or Certified Mail: Computershare Trust Company, N.A., Depositary c/o Voluntary Corporate Actions PO Box 43011 Providence, Rhode Island 02940-3011 |
By Express or Overnight Delivery: Computershare Trust Company, N.A., Depositary c/o Voluntary Corporate Actions 250 Royall Street, Suite V Canton, Massachusetts 02021 |
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID BINDING DELIVERY TO THE DEPOSITARY.
Any questions or requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
Banks and Brokerage Firms Please Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 967-4607
-
Exhibit (a)(1)(A)
