1. Ethical Standards at the Onset of a Hostile Takeover: Target vs. Raider
An Honors Thesis presented
By
Nicholas S Joslyn
To
The Honors Program
In Partial Fulfillment of the Requirements
For the Degree of Accounting
Honors Thesis Advisor: Jeffry Haber, PhD, CPA
Department of Accounting
Iona College
New Rochelle, New York
January 26, 2015

2. Joslyn 1
Acknowledgements
I would like to acknowledge and thank my thesis advisor, Dr. Jeffry Haber for all of the
guidance, insight, and experience he has been able to give me during the past year. His
knowledge of the field of business has proven instrumental, not only in the choosing of a topic,
but the research into my final topic as well.
I would also like to thank Dr. Donald Moscato for offering up his time to help and guide
me throughout the year.
As well, my mother, Joanne Joslyn, MA, SS, was with me the entire way, helping me
wherever I needed. She kept me on track and stuck it out with me until the end. Not only was she
my first teacher, she has continued to be the most influential teacher in my life.

3. Joslyn 2
Abstract
Hostile takeovers carry a negative connotation as being an unethical takeover of a
company for the sole purpose of financial gain. Takeovers are a fundamental practice of business
and are instrumental in the expansion of many businesses. The problem this thesis attempts to
solve is that the negative connotation of the hostile takeover is false and in terms of normative
ethics, the corporate raider is acting more ethical than the target company. To solve this issue, I
used an analysis of two case studies under the realm of normative ethics to determine which
party acted ethically at the onset of the takeover. The result of analyzing the initial actions of
both sides of a takeover showed that the companies initiating the takeover were the ethical party,
and the companies denying the takeover acted unethical. The purpose of the study is for general
use, and not intended to change the practices of businesses. It was intended to educate
stakeholders (and future stakeholders alike) as to what party they may decide to side with at the
onset of a takeover.

4. Joslyn 3
Table of Contents
1. Literature Review
a. Introduction to Hostile Takeovers…………………………….p. 4
b. Resurgence of Hostile Takeover Market Post-Recession….....p. 7
c. General Government Regulation………………………….......p. 9
2. Methods of Takeover ……………………………………………….....p. 11
3. Methods of Defense………………………………………………...…..p. 14
4. Normative Business Ethics………………………………….......…......p. 16
5. Analysis of Proposal/Case Studies
a. Case #1…………………………………………………...…......p. 20
b. Case #2…………………………………………………...…......p. 27
6. Conclusion……………………………………………………...……....p. 31
7. Appendix A…………………………………………………………….p. 32
a. Endurance Specialty Holdings Press Release…………….….p. 33
b. Sanofi-Aventis Press Release……………………………….…p. 40
8. References………………………………………………………….......p. 43

5. Joslyn 4
The notion of a consumer purchasing an item that is not for sale is hard to comprehend
for most individuals. We have all seen the movie character that is so enormously wealthy that he
or she will see an item they like, and assume there is a price that said item can be bought for.
Similar to the market of consumers and their products, the attempted takeover of a company that
is not for sale is flagged in the world of business as being aggressive and hostile, and from which
the actions adopt the name “hostile takeovers.” Without any prior knowledge of the dealings, the
term hostile takeover immediately receives a negative connotation. What good can come out of a
“hostile” action that involves the takeover of another entity? It is curious to note that hostile
takeovers have been around for as long as businesses have been in place. The purpose of this
thesis is to present the possibility that the intentions of the hostile company (acquirer) are more
ethical than the defensive actions of the target stakeholders, primarily the managers of the target
company. By analyzing the complex structures of hostile takeovers and presenting two case
studies, the decisions of the target stakeholders, again primarily the managers, will be presented
to be less ethical than those of the party attempting the takeover.
A hostile takeover is the result of a target company’s board of directors resisting an
acquisition by an aggressor company (Jeter & Chaney, 2012, p.5). Three assumptions are
presented for the sake of advancing this definition:
1. That the target company has not put itself in a position to be purchased. For this
assumption to hold true it is reasonable to assume that if a company is willing to be acquired by
another company, the targeted company and aggressor company engages in friendly talks after
an acquisition offer is made.

6. Joslyn 5
2. The target company defends against the aggressor company by using available defense
tactics.
3. The aggressor company has a distinct motive for attempting to acquire a company.
With these three assumptions in mind, the area of hostile takeovers becomes a separate
independent branch of mergers and acquisitions. Many companies disguise hostile takeovers
under the realm of mergers and acquisitions, but hostile takeovers are fundamentally different.
This difference stems from our three assumptions. One can consider a hostile takeover as a
merger and acquisition gone wrong. While some deals can start as an attempted mutual merger
and acquisition, they can quickly turn sour when a target company’s board refuses to participate.
Thus the aggressor company will seek alternative means of buying out the company without a
formal contract. If a proposed acquisition is denied by a company’s board, the offering company
takes the deal to the stakeholders (those individuals or groups who have a stake in the company’s
activities, both financial and operational), thus going against the board and starting the hostile
takeover.

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Many companies employ a mergers and acquisitions department in their day to day
operations. In recent years, mergers and acquisitions have rebounded after the economic collapse
that began in 2008 and ended in 2009. This upsurge can be measured by the increase in average
earnings per share within a week after the initial announcement that a company will begin to
attempt to communications with another company regarding a possible merger or acquisition
(See figure #1 below). Verizon Communications, in late 2013 to early 2014, purchased
Vodafone’s 45 percent interest in Verizon for $130 billion (Verizon Communications, 2014).
This acquisition consisting of cash and stock is the largest-ever M&A to date that consisted of a
cash component according to a brief released by JP Morgan (JP Morgan, 2014). Mergers and
Acquisitions are becoming larger and more common due to the decrease in interest rates and
more availability of funds from banks. This is synonymous for M&A’s and hostile takeovers.
Figure #1 Comparison of total U.S. Capital of Announced M&A’s in 2012 and 2013
Graph from JP Morgan: Dealogic M&A Analytics

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Resurgence of Hostile Takeover Market Post-Recession
As mergers and acquisitions have increased in the last few years, so did the trend in
hostile takeovers. In an article from the New York Times entitled, Hostile Takeover Bids for Big
Firms Across Industries Make a Comeback, the efforts of some of these hostile aggressors are
highlighted, illustrating how recent attempted takeover activity is faring (Gelles, 2014). In April
of 2014, Endurance Specialty Holdings made an unsolicited offer for the acquisition of Aspen
Insurance Holdings. The takeover attempt initially started out as a peaceful business transaction
between the two companies with Endurance attempting to make an offer and to negotiate in
private with Aspen. Aspen refused Endurance’s offer numerous times resisting acquisition,
especially because a “for sale sign” was never displayed. Endurance Specialty Holdings took the
deal public and began to engage in a hostile takeover against Aspen Insurance.
Hostile takeovers are making a comeback for a few main reasons. The first reason,
according to Jim Head, co-chief of mergers and acquisitions for the Americas at Morgan Stanley,
is “the reputational cost of doing it [hostile takeovers] seems to be lower than it ever was”
(Gelles, 2014). What Jim Head is saying is that, at one time, when one entered into a hostile
takeover, one’s reputation was immediately changed as either extremely hostile or, in the case of
a failed attempt, possibly naïve. Reputational cost has always been a factor of the takeover
market. For instance, novels such as Barbarians at the Gate and The White Sharks of Wall Street
were written about the notorious corporate raiders of the 20th
century and how they shaped the
market. Barbarians at the Gate details the leveraged buyout of RJR Nabisco (Burrough &
Helyar, 1990). CEO of RJR Nabisco, Ross Johnson, wanted to buy out the remainder of the
Nabisco shareholders after he felt that his company was severely undervalued by the market.
Ross Johnson shows little revere for his shareholders with his rampant bidding. One of the most

9. Joslyn 8
famous quotes of the book has Johnson saying “A few million dollars are lost in the sands of
time” (Burrough & Helyar, 1990, p.72). Henry Kravis and George Roberts were a part of a
private equity firm, Kohlberg, Kravis & Roberts Co.2
, specializing in leveraged buy outs. When
Kravis and Roberts learned of the planned buyout, a bidding war began to oppose Johnson. The
eventual bidding war was won by Kohlberg, Kravis & Roberts Co. creating a massive gain in
value for their equity firm. The public became aware of their firm because of the mass press
coverage of the leveraged buyout. Presently, they manage $96.1 billion of assets. The White
Sharks of Wall Street follows the path of Thomas Mellon Evans and some of the original
corporate raiders that had strong reputations in the business of hostile takeovers. The
commonality between the two is that reputation was everything in the previous takeover booms.
Every businessman knew the individuals who were deemed “corporate raiders,” the men who
were greatly and successfully involved in hostile takeovers. Business acquisitions in today’s
market environment are now centered on teams and departments, instead of the upper
management as in previous booms (Beitel, Patrick, & Rehm, 2010). This makes the reputation
aspect of a hostile takeover much less risky.
Another reason for this increase in hostile takeover activity is the increased confidence of
boardrooms throughout Wall Street (Gelles, 2014). This is measured by the larger bids that
companies are offering to take over one another. Pfizer offered AstraZeneca nearly $119 billion,
a substantial sum of money, especially since this offer alone is 7-8% of the of the global offer
volume (Gelles, 2014). Since the Recession, prices have risen significantly. The steady growth
gives boardrooms the justification for the larger, unsolicited offers for companies they have long
had their eye on.
2
More information about KKR apart from the RJR Nabisco situation can be found on their corporate website at
www.kkr.com.

10. Joslyn 9
In response to boardrooms becoming more aggressive, target companies have also
become more aggressive in their rejections of unsolicited offers. Common wording that
companies use is that the offer “substantially undervalues” the company. Take Allergan, Inc., a
Health Care Company specializing in multiple markets of the health care industry, for example.
In June 2015, they rejected a $53 billion offer from the pharmaceutical company Valeant
Pharmaceutical. In the statement issued by Allergen, Allergan used the phrase “substantially
undervalues” as a means of rejection. In December 2013, Jos. A. Bank Clothiers rejected a
takeover from Men’s Wearhouse noting that the offer “substantially undervalues” their company.
A rejection of the initial offer often drives share prices up. The rejection shows that the target
company has confidence in themselves and that should be valued higher, usually leading to
larger follow-up offers, thus driving the share prices up. One could also argue that this rejection
is just to raise the initial tender offer. This is not a long term defense, but does provide a small
amount of leeway. Men’s Wearhouse did eventually acquire Jos. A. Bank Clothiers for a higher
bid amount (Gelles, 2014).
While target companies are indeed rejecting larger deals than ever before, they all share a
common weakness that was previously not an issue. Staggered terms for board members were a
commonality among many companies in previous takeover booms. Present day boards are often
on the same term schedule, allowing shareholders to vote out a board majority if the board
becomes misaligned with stakeholder views.
General Government Regulation
With this increase in takeover activity, it is important to analyze the changing
governmental regulations or lack of regulation. According to Eric Rosengren (1988, p. 70),

11. Joslyn 10
“the foundation of federal securities law concerning changes in corporate control is the belief
that knowledgeable investors, offered all the facts, can make appropriate decisions”. The
government does not seek to control every aspect of takeovers. The main focus of the federal
regulations is for anti-trust purposes. The government is focused on making sure that all
information relevant to securities is publically disclosed so that the playing field is leveled. If
companies were not mandated to disclose their financial information, then they could lie about
the true value of their company, misleading investors into making terrible decisions, or as
Rosengren states, “unproductive or ineffective activities” (Rosengren, 1988, p. 70). Companies
could claim profits were higher, or include “hidden” goodwill based off of assets they control,
hiding the true state of these assets.
The Securities and Exchange Commission [abbreviated as “SEC”] is the governing body
that insures the proper information is disclosed publicly. Companies are required to disclose
certain financial information to the SEC on a reoccurring basis depending on the type of
information that is required. The first act to greatly affect hostile takeovers was the Securities
and Exchange Act of 1934. The Securities and Exchange Act was the first federal act to require
the disclosure of any tender offer involving cash. The act itself states that one of its duties is to
“insure the maintenance of fair and honest markets” (Securities and Exchange Act of 1934). This
was an important milestone in the realm of regulation because it set a standard of allowing
companies the freedom to make offers and expand without being restricted unfairly by the
government. The act itself was later amended by the Williams Act of 1968. This act brought the
Securities and Exchange Act up to a new standard by making the disclosures more in depth.
Companies must now disclose where the funds involved in the tender offer are coming from.
Light is shed upon any hidden investors behind these tender offers. In addition, the initial

12. Joslyn 11
purpose for the offer and the goals, if purchased, must also be disclosed to the SEC. Not only do
would-be-raiders have to disclose tender offers, but also anyone who purchases five percent or
more of the outstanding shares of a company must publicly disclose the purchase. This is to alert
shareholders and investors that someone may be attempting to gain control of a company by
purchasing controlling interests in a company without making a formal tender offer.
The federal government sees the shareholders at a natural disadvantage in a hostile
takeover situation. Hostile takeovers can sometimes seem to overwhelm a company’s
shareholders. That is why the laws in place allow shareholders adequate time and the proper
disclosures to make an educated decision on how to react to the attempted takeover.
Methods of Takeover
The hostile takeover of a company is generally initiated in two ways. The first way a
raider can initiate a takeover of a company is through a tender offer. A tender offer involves the
public offer by the acquirer company for the target company’s stock from the stockholders for a
specific price (Austin, 1974)3
. The acquisition of a company’s stock can be costly, as the stocks
are bid for at a premium to entice more shareholders to sell. A premium is an amount offered that
is higher than the current market price. The target company can benefit from these offers at a
premium because of the rise in market value per share that usually follows a tender offer. When
tender offers are announced, the target company’s management will often create a press release
urging shareholders to not accept the tender offer. One of the largest hostile takeovers is that of
3
Douglas Austin is the author of The Financial Management of Tender Offer Takeovers. As a professor and former
Chairman of the Department of Finance at the University of Toledo, Dr. Austin has written numerous articles and
books relevant to takeovers.

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Sanofi-Aventis taking over Genzyme through a tender offer from 2010 to 2011 (Torsoli &
Tirrell, 2011). On July 2 of 2010, when the takeover efforts were announced by Bloomberg, the
stock was valued at $49.86 per share. On August 29 of the same year, Sanofi-Aventis had
announced a bid for $69 per share, but was refused. The stock itself rose to about $70 between
July and August from the bidding activity of Sanofi-Aventis. Finally, an offer was accepted and
Genzyme’s shareholders received $74 per share in cash (Torsoli & Tirrell, 2011).
Tender offers, while they may fundamentally function the same, do not always include a
premium offer. Celgene Corporation4
, for example, was made aware of an unsolicited tender
offer by TRC Capital Corporations for the acquisition of 1,000,000 shares of common stock. A
mini-tender offer is a tender offer for ownership of less than five percent of a company’s stock.
According to the SEC on mini-tender offers, a company avoids having to alert the SEC to their
actions nor do they have to provide withdrawal rights to those who have already tendered their
shares. The target of a mini-tender offer is the less informed shareholders who assume that a
premium offer is already included in the bid, which is usually not the case. Since the offer was
not for a large number of shares, it was offered below market value, which is very common for
mini-tender offers. The offer itself was for 1,000,000 shares of stock at $101.75 per share.
According to Celgene, at the time of proposal, November 18, 2014, the stock was valued at
4.71% higher rate. Specifically, the release says that “Celgene does not endorse this unsolicited
“mini-tender” offer and recommends stockholders reject the offer” (Celgene, 2014). The offer
was obviously unsolicited, and therefore Celgene responded as such. Press releases such as the
example given are a commonality once tender offers are recognized, especially those offered at
4
Celgene Corporation is a global biopharmaceutical company that focuses on the treatment and immunization of
serious diseases. More information on this company can be located on their corporate website at
www.celgene.com.

14. Joslyn 13
below market value. Though the company can release memos to urge shareholders not to tender
their shares, it is ultimately the shareholders who have the power to keep or sell their shares to
the impending raider.
The other popular method of takeover is to engage in a proxy fight. Shareholders are
given the right to vote for corporate elections. “Shareholder voting rights give you the power to
elect directors at annual or special meetings and make your views known to company
management and directors on significant issues that may affect the value of your shares”
(Securities and Exchange Commission)6
. The vote for board members is the most sought after
power for corporate raiders. While this right to vote is given to the shareholder, it can be passed
on with the shareholder’s consent. The shareholder can elect to give the vote to someone else,
known as a proxy vote. This is usually done when a group of shareholders gets together and
delegates its vote or votes to another group. Unlike tender offers, proxy fights do not involve the
acquisition of stock; therefore a company may not be aware immediately of the impending
takeover. Corporate raiders can use proxy votes to insert their vote into a company and change
the board of a company. The raiders can have themselves elected to the board, or elect someone
they feel that will better run the company and unlock its true value. Carl Icahn, the popular
majority shareholder of Icahn Enterprises7
, is known for his investments and corporate takeovers.
In 2006, Icahn engaged in a proxy fight against Time Warner to replace some of the board
members. In the article published by Richard Siklos and Andrew Sorkin (2006), Time Warner
had to reach a settlement with Icahn as the proxy fight had taken its toll on the board members
for some time. Initially, Icahn wanted to replace two board members with two people that he
6
The SEC provides a website tailored to the rights of investors. More information on the website can be found at
www.Investor.gov.
7
More information on Icahn Enterprises can be found on their corporate website at
http://www.ielp.com/index.cfm

15. Joslyn 14
trusted and felt could unlock potential for the company. While Icahn’s group only had a 3.3%
share, their proxy fight still caused so much a disturbance that a deal was struck between Mr.
Parsons, chairman of Time Warner, and Icahn to add two directors to Time Warner’s board in
addition to a list of financial reforms. It is apparent that although a raider may have a small
percentage of the votes, they can still be very effective. The question whether proxy fights or
tender offers are more suited for takeovers is dependent on the raider’s mission and the
stakeholders of a company.
Methods of Defense in Hostile Takeovers
A complexity of hostile takeovers is the defense methods. The method of defending a
hostile takeover for one company may certainly not be the same for another company. Ken
Hanly (1992) 9
describes three takeover defenses that are the actions of the management only. A
greenmail defense can be described as a reverse takeover. The raider has bought shares of
Company A. Company A sees this action as an imminent takeover, and begins a defensive
strategy. They choose to strike a deal with the raider and Company A repurchases the lost shares
at a higher premium. Company A may be safe for now, but it has potentially taken on a lot of
debt. The raider comes out as the total winner here, profiting greatly from this double premium
above market value they are paid for shares that they held for a short amount of time.
Golden parachutes are another method of defense against hostile takeovers. A golden
parachute is a system that guarantees that a manager will be compensated after a hostile takeover
and the management is fired or jobs are eliminated. Immediately, one may think that managers
will welcome a hostile takeover. Golden parachutes are designed to entice managers to align
9
Ken Hanly is the author of Hostile Takeovers and Methods of Defense: A Stakeholder Analysis. In his journal, he
describes a number of defenses and their negative impact to shareholders.

16. Joslyn 15
their interests with those of the shareholders. A hostile takeover that will benefit a firm will be
less likely to be resisted if a golden parachute is in place (Singh & Harianto, 1989). A hidden
benefit of golden parachutes is that they attract better managers. A good manager is more likely
to work for a company that offers golden parachutes because the parachutes are essentially more
compensation; in effect, an insurance policy that guarantees payment if their position is
terminated.
Hanly describes leveraged buyouts as “one method of ensuring a company is not taken
over by corporate raiders is for management, often associated with outside financiers, to
purchase the shares of the company and ‘take it private’” (Hanly, 1992, p. 901). The firm itself
does not use a lot of their own capital to finance the buyout; rather they use “leverage.” This
leverage is often in the form of junk bonds11
. Since these junk bonds are at a much higher risk,
the value of the firm is used as collateral. Richard Ruback (1987), the Willard Prescott Smith
Professor of Corporate Finance at Harvard, describes the market value of a firm as the sum of
two components. The first component is the value of the firm unchanged and the second
component is the relationship between the probability that management will change and the
change in value that would result (Ruback, 1987, p. 50). Together, these two components give
the overall market value of the firm, a valuable figure for stakeholders and investors. The value
of the firm is collateral for the high risk junk bonds. Management uses the first component of the
market value of the firm as collateral, as they feel that the firm would be run better by
themselves, or are in fear of losing their jobs. With so much capital being promised by these
investment banks in the form of junk bonds, the value of the firm is really the only sufficient
11
Junk bonds, also known as high-yield bonds, are a security that has higher risk than most bonds, but provides a
greater return because of their higher interest rates. Companies that sell junk bonds are at a higher risk of
defaulting, making them very risky for investors to purchase and add to their portfolios.

17. Joslyn 16
collateral for the junk bonds. The biggest issue is that if the financiers see that a leveraged
buyout beginning to look unfavorable for their side, they will call the bonds, creating a mass
amount of panic and debt at one time that a firm cannot handle. Leveraged buyouts were the tool
of the fall of RJR Nabisco. Ross Johnson, CEO of RJR Nabisco, wanted to buy back his
company’s stock and take it private. As number thirteen of the twenty Johnsonisms12
states,
“Recognize that ultimate success comes from opportunistic, bold moves which, by definition,
cannot be planned” (Burrough & Helyar, 1990, p. 39). Leveraged buyouts often turn into these
bidding wars as in the case of RJR Nabisco.
The last defense tactic to focus on is the poison pill. The poison pill was created in 1982
by a corporate lawyer named Martin Lipton (Futrelle, 2012). The name, poison pill, itself has a
negative meaning to it, much more negative than that of hostile takeover. A poison pill
throughout history has been associated with a capsule taken to commit suicide. The poison pill
works by making a company’s stock look as unattractive as possible to a raider in order to deter
the offer. This can often be accomplished by selling off important assets of a company or by
issuing excess shares, thereby diluting the number of shares on the market.
Normative Business Ethics
Normative ethics is the most widely accepted branch of ethics that defines what
should be right or wrong behavior within the business community. According to the
Encyclopedia Britannica, normative ethics is “that part of moral philosophy concerned with
criteria or what is morally right or wrong” (Encyclopedia Britannica). Business is a constant
state of action and reaction. It is a communication between two parties to achieve a goal.
12
The codification of the Standards Brands culture broken into twenty life and business strategies based on the
observation of Ross Johnson.

18. Joslyn 17
Normative ethics is used to guide those involved in business on whether or not their actions
are considered morally right or wrong.
Normative ethics is generally broken down into smaller segments. The Normative
Theories of Business Ethics: A Guide to the Perplexed, written by John Hasnas (1988), is
one of the leading pieces of literature that discusses normative ethics in business. The three
leading theories of normative business ethics are stockholder theory, stakeholder theory, and
social contract theory (Hasnas, 1998, p. 20).
Stockholder theory is one of the more limiting theories of normative ethics. As the
name suggests, the primary focus of stockholder theory is the stockholders. Stockholders are
those who own stock in a company, that is, they have a fiduciary stake in the company.
“Under this view, managers act as agents for the stockholders…The existence of this
fiduciary relationship implies that managers cannot have an obligation to expend
business resources in an ways that have not been authorized by the stockholders
regardless of any societal benefits that could be accrued by doing so” (Hasnas, 1998,
p. 21).
As Hasnas states above, the ethical choices of stockholder theory can only be rooted in what
the stockholders decide. Managers are not allowed to stray from the mission of the
stockholders, even if the manager does not feel the decisions are right. This is assuming that
the stockholders have drafted a specific mission for the managers to abide by. Quite often a
person will buy stock in a company for the sole purpose of gaining the greatest return on
investment they can (Hasnas, 1998, p. 22). If stockholders only buy stock for the purpose of

19. Joslyn 18
maximizing returns, their mission, according to the theory, would be implied. All
management decisions should increase profits. The big issue with this theory is that the
business’s responsibilities are only to the stockholder. This view limits how and where a
business can function that would contribute any societal benefits not delegated by the
stockholders. With the implied missions of the stockholders, decisions to better a company
often go hand-in-hand with increasing profits. The managers therefore have a social
responsibility as well as a responsibility to those stockholders who want to maximize their
returns. According to Milton Friedman, one of the most influential economists of the 20th
century,
“There is one and only one social responsibility of business—to use its resources
and engage in activities designed to increase its profits so long as it stays within the
rules of the game, which is to say, engages in open and free competition, without
deception of fraud” (Friedman, 1962, p. 133).
Managers must make decisions that directly benefit stockholders and are legal and non-
deceptive. Thus, managers are required to follow the laws set up by government regulatory
agency such as the SEC. But, while managers pursue stockholder profit, this pursuit, acting
within legal guidelines, often goes against the public good. For example, stockholders
delegate that they want a manufacturing company to become very liquid. The company
must sell off many of its assets and become more of an investment company to meet the
liquidity goals set forth by the stockholders. They were doing a public good by providing
jobs and fair wages. It would go against the public good to sell off their assets and eliminate
jobs. This is one hypothetical example of conflict within stockholder theory.

20. Joslyn 19
The most accepted normative ethical theory in the business community is stakeholder
theory, which is the greater focus of this thesis. The normative stakeholder theory acts almost as
a foil to stockholder theory. While stockholder theory is based on the mission of the
stockholders, stakeholder theory states that management is ethically responsible for anyone who
has a stake in the company. Stakeholder is a very general term which can encompass a large
variety of individuals or entities that are affected by a company’s actions. A stakeholder is any
person or entity that is a stockholder, employee, manager, investor, local community, supplier,
etc. According to stakeholder theory, the term encompasses anyone who is affected by the
decisions and business activities the specific company. The responsibility of management under
stakeholder theory goes beyond that of stockholder theory. Under stakeholder theory, profits are
not in the forefront of decision making, the survival of the company is paramount. The obligation
of managers is not to please one or two groups of stakeholders, but to create a balance between
them all (Hasnas, 1998, p. 26). To meet this obligation all stakeholders would have input into
any decision the company management would make. This includes decisions that would affect
the community, such as corporate real estate, expansion, pollution, job reduction. Stakeholder
theory carries various normative implications. The first of these implications is that unlike
stockholder theory, managers do not have the exclusive fiduciary duty to various stakeholders of
the company. Managers must either work for all stakeholders or none at all. “An organization
that is managed for stakeholders will distribute the fruits of organization success (and failure)
among all legitimate stakeholders (Phillips, 2003, p. 487). Another implication is the Stakeholder
Enabling Principle (Freeman, 2001, p. 47). This states that corporations should be managed
pertaining to stakeholder interests. This principle is the backbone of stakeholder theory.

21. Joslyn 20
The third theory, which is less accepted than stakeholder and stockholder theory, is social
contract theory. “The social contract theory posits an implicit contract between the members of
society and businesses in which the members of society grant businesses the right to exist in
return for certain specified benefits” (Hasnas, 1988, p. 29). In this theory, businesses work for
society and are less organized for profits.
As discussed previously, Stakeholder Theory defines ethical business practice as a
company’s managers securing a more profitable and stronger future for the company. Despite the
many negative portrayals of the aggressor companies, corporate raiders in a hostile takeover
more often increase the revenue and performance of the targeted companies. Thus, following
stakeholder theory, where management is focused on stakeholder views, the aggressor
companies act more ethically in their takeovers then the current managers of the targeted
companies. The following case studies will further support this statement.
Analysis of Proposal/Case of Study
Case Studies
Overall Summary: In an effort to determine the stakeholder party acting ethically in a hostile
takeover, it is necessary to analyze specific takeovers in depth. While ethics often times can lack
black and white solutions, an analysis the following cases in depth from both sides as to avoid as
much gray area as possible.
Case #1: Endurance vs Aspen
Summary – The first case analyzed is an attempted takeover that took place in 2014. Endurance
Specialty Holdings proposed to acquire Aspen Insurance Holdings for a large premium over their

22. Joslyn 21
share price at the time. The combination of these two companies would have created a renewed
leader in global specialty insurance and reinsurance. The value proposed by the tender offer and
possible eventual combination would offer over $5 billion of combined annual gross premium
written (Endurance Specialty Holdings, 2014). A deeper look into the specifics of the proposed
takeover will shed light on the situation and its specific participants.
Backstory – Endurance Specialty Holdings is a global holdings company that is involved in
corporate insurance and reinsurance. According to their corporate website, they “build loyalty
through responsive and consistently high-quality underwriting, actuarial, legal and claims
services, and work with clients to manage their exposures.” They made a bid to acquire Aspen
Insurance Holdings. Aspen Insurances Holdings works in the property and casualty insurance
industry, similar to Endurance Specialty Holdings. Endurance released that they had been
attempting to engage in friendly and confidential dealings with Aspen since late January of 2014.
Endurance had realized there was great value in the merger between the two, and since they had
the capital to pull it off, they would make the merger happen even Aspen would not.
Endurance’s chairman and CEO, John Charman, was quoted in a press release by
Endurance saying:
“This transaction is, quite simply, a unique opportunity to deliver value to shareholders of
both Aspen and Endurance, while creating a new global leader in the industry. The
proposal offers up-front value for Aspen’s shareholders who will receive a substantial
premium for their shares, as well as the opportunity to participate – along with
Endurance’s shareholders – in future value created by a stronger and more profitable
company” (Charman, 2014).

23. Joslyn 22
Endurance sees this transaction as having a positive outcome for both companies becoming one.
As promised by Charman, it seems as though Aspen’s shareholders and employees will be given
equal opportunities as those of Endurance Special Holdings. In a letter directly to Aspen’s board
of directors, Endurance had even made it known that the management of Aspen would be
influential in this larger and stronger company. Endurance is very respectful of Aspen and its
stakeholders, going as far as to say “We [Endurance] have great respect for the Aspen franchise
and its relationships with its key customers” (Charman, 2014).
Aspen on the other hand, with all of these advantages promised by Endurance, fought the
merger and turned it into a hostile takeover attempt. After receiving an unsolicited offer from
Endurance, the put out a press release attempting to keep stakeholder confidence in Aspen that
they are a capable and strong on their own. “Endurance’s ill-conceived proposal undervalues our
company, represents a strategic mismatch, carries significant execution risk, and would result in
substantial dis-synergies” (Jones, 2014). Aspen believes that the merger would hurt their
corporate culture and carries a lot of financial and underwriting uncertainty. They believe that
they are able to create significant value to their own shareholders without the merger of Aspen
Insurance Holdings and Endurance Specialty Holdings. Another point that they make in their
letter back to Endurance is that Endurance is under new leadership and has unproven strategy.
Comparison:
When analyzing the two companies’ management, it is important to look at how their
decisions would affect stakeholders. By analyzing the rationality and methods by each company
using the normative ideals of stakeholder theory, the ethical and unethical parties will be made
clear.

24. Joslyn 23
Both sides provide arguments of their stance are on this takeover. Endurance Specialty
Holdings provides forward looking statements to back up their position that Endurance and
Aspen should merge under the veil of Endurance. These statements are the product of Endurance
cooperating with their financial advisors, Morgan Stanley & Co LLC and Jefferies LLC
(Endurance Specialty Holdings, 2014):
 “‘An increased scale and market presence that would allow both companies to match or
rise above any competition.’
 ‘It would offer a diversified platform across many products globally with the help of an
integrated management from both companies, not just those from Endurance.
 The potential for profit would coincide with the main goal of this takeover, increased
scale and diversification.’
 ‘The capital position obtained from this transaction would strengthen against volatility
one may expect in the global market.’”
As one may suspect, these statements all appear to be a best case scenario. If little to nothing
goes wrong, Endurance can expect to greatly benefit from this transaction and rapidly become an
industry leader.
Aspen’s reasons for defense against a takeover by Endurance are less quantitative13
, yet give
Aspen’s stakeholders a view on how confident Aspen’s management is about their own
company. In addition to how confident the management is on remaining on their own, they are
13
While the press releases put out by Aspen Insurance Holdings may contain less figures, they have performed the
appropriate research and due diligence with the guidance of Goldman, Sachs & Co. expected by any major
corporation.

25. Joslyn 24
very skeptical of the high hopes of Endurance Special Holdings (Aspen Insurance Holdings,
2014):
 “‘Consideration that a combination would burden Aspen with Endurance’s unproven
underwriting teams with no clear strategy; an unprofitable insurance business14
; and a
volatile and cropped business.’
 ‘Endurance’s offer undervalues Aspen and risks to devalue it over the long term.’
 ‘Endurance has a mixed operating track record, no experience with large acquisitions,
new leadership and an unproven strategy.’
 ‘Aspen has developed a unique corporate culture that is influential to its franchise value
setting it apart from its competitors.’
 ‘The substantial execution risks cloud the possible gains that could be made from this
transaction.’”
These claims by Aspen are performed with due diligence and are refuting all of Endurance’s
proposals of a significant increase in business activities and revenues.
One of the key factors to look at is that Aspen believed the offer undervalued their
company. The initial offer was to acquire all of Aspen’s shares for $3.2 billion. This comes out
to around $47.50 a share. One of Aspen’s concerns was that the capital for the acquisition was
risky, though Endurance has bid an amount they have already secured in cash and other funds.
Aspen is denying the shareholders a huge profit on their return. Aspen’s all-time high share price
is $41.43 on the closing of 2013. This price sunk down to $39.37 at the time of this offer
(Endurance Specialty Holdings, 2014). The shareholders of Aspen are also given the opportunity
14
According to the press release, “Endurance’s insurance segment underwriting income ex reserve releases has
been negative from 2011-2013” (Aspen, 2014).

26. Joslyn 25
to purchase shares of the new company with their old shares, or a combination of the both. A
popular tactic by companies facing takeover is to immediately deny the purchase and claim that
it seriously undervalues their company. This is usually followed by a rise in the market price of
the shares of the target company. The chart below maps the share price of Aspen Insurance
Holdings throughout the attempted takeover by Endurance. The sharp rise in share price is
evident at the time of the initial tender offer. This is eventually followed by a dramatic decline
when Endurance retracts its offer on July 30 (See figure #2 below).
The management of Aspen remained entrenched, even after Endurance had increased
their offer to $49.50 a share, still above the highest share price Aspen has ever seen. While
Aspen’s management refused to be bought, they did not provide their shareholders and
stakeholders alike with the proper information to refute the promising offer of Endurance.
Endurance promised a new company that would be a global leader in insurance and reinsurance.
Figure #2 Aspen Insurance Holdings Share Price (February 2014 – January 2015)
Graph from: Yahoo! Finance

27. Joslyn 26
Endurance provided Aspen’s stakeholders with a presentation outlining the reasons for
their attempted acquisition. Outlined in the presentation is a comparison of both companies’
corporate governance. Under stakeholder theory, it is important that a board of directors being
aimed in the direction of the stakeholder’s interests. Endurance’s board is up for reelection every
year. Aspen’s board is set for reelection for every three years. While having longer terms for a
board can have some benefits, board members can become entrenched over the three year terms
and lose sight of the stakeholder views. Another common practice of corporate governance is for
management of a company to own a significant share of their corporation, thus giving them a
stake in the work and decisions that they perform. While Endurance’s management and
employees own 5.2% of the company, Aspen’s management and employees own less than 1.2%
(Endurance Specialty Holdings, 2014). While stakeholder theory does not explicitly state that
management has to have a material stake in their own company in the form of stock, it does give
them more incentive to remain aligned with stakeholder views, as they become a material
stakeholder themselves. Aspen’s management is unethical in the way that they have become
unaligned with their stakeholders. They are denying the merger with Endurance because they
feel they are better off on their own. The management of Aspen is entrenching itself, denying
stakeholders of any possible gains that could be had. Endurance played the side of the good guy
appealing to the shareholders of Aspen. While this is an obvious move to appear like the hero,
they do offer many benefits, as described above, to Aspen and its shareholders.
The entrenched board of Aspen resorted to adopting a shareholder rights plan, commonly
known as a “poison pill.” The rights plan would go in affect if anyone, mainly Endurance, was to
acquire a 10% holding of Aspen’s outstanding shares. This defensive tactic goes against
stakeholder theory as it is essentially a last ditch effort to lower the price of a company’s shares

28. Joslyn 27
to deter the takeover. Endurance had finally withdrawn its bid for the takeover on July 30, 2014.
Taking a look at the share price of Endurance (see figure #3 below) since the termination of the
offer, it is evident that there company has continued to perform, which goes against the fears that
Aspen had.
Conclusion:
From the information and comparison provided above, stakeholder theory dictates that it
is Aspen who is acting unethical. It is important to keep in mind that ethics in this situation are
not choices as dire as life and death. Ethics, under the realm of stakeholder theory, are how well
aligned management is with stakeholder ideals. In the case of this attempted takeover, the
stakeholders (aside from Aspen’s board) of both companies viewed the takeover as beneficial to
both companies. New areas of business could have been reached and a larger, more competitive
company would have been the result.
Case #2 Sanofi-Aventis and Genzyme Corp
Summary:
Figure #3 Endurance Specialty Holdings Share Price (October 2014 – January 2015)
Graph from: Yahoo! Finance

29. Joslyn 28
The second hostile takeover to be analyzed is the takeover of Genzyme, an American
based biotechnology company by Sanofi-Aventis, a multi-national pharmaceutical company. The
deal was a long time coming and, similar to Endurance vs. Aspen, was an offer for a large
premium over their share price. The combination of these two companies created the one of the
largest biotechnical companies on the globe.
Background:
The takeover events initially began on May 23, 2010. Sanofi-Aventis approached
Genzyme attempting to engage in friendly talk regarding a merger. The effort did not initially
turn into a hostile takeover, as Genzyme was currently engaged in a proxy battle against
notorious corporate raider, Carl Icahn, Icahn Enterprises. The result of this proxy battle, which
did not result in a takeover, was that Genzyme settled with Icahn and appointed two directors (of
Ichan’s choice) to their Board. Sanofi-Aventis at this point, reached out to Genzyme on July 7th
to re-open negotiations about a merger. On July 10th
, Genzyme officially stated that after their
board meeting, they decided a merger was not in the best interests of their company at this
present time. Sanofi-Aventis informed Genzyme of the positives of the merger and on July 29th
,
they offered Genzyme $69 per share. The negotiations were still just between the two boards of
the company. Stakeholders were kept out of the negotiations, limiting their opinion on the
matter. After having their offer rejected again, Sanofi-Aventis went public with their offer to
reach out to all of the stakeholders, primarily the shareholders, to work around the entrenched
board. Genzyme’s management released a statement that they rejected the public offer. The bid
turned hostile on October 5th
, after months of failed attempts at friendly negotiations. Sanofi-
Aventis, keeping their original bid offer of $69 per share, initiated a tender offer for all shares of
Genzyme. One of the biggest reasons that Genzyme’s board of directors has entrenched itself is

30. Joslyn 29
that they believed that Sanofi-Aventis’s bid seriously undervalued their company. An interesting
article from the Wall Street Journal titled Sanofi’s Genzyme Bid Turns Hostile (Whalen &
Cimilluca, 2010), noted that Sanofi-Aventis would not raise its price because there was no sign
of a white knight15
, thus they found it unnecessary to bid against a nonexistent opponent. Sanofi-
Aventis did say it might raise its price if it was given the rights to look at Genzyme’s book and
be able to determine the true value of the company. Sanofi-Aventis went as far as to meet with
shareholders of Genzyme that owned a significant stake in the company, and the result was that
they supported the transaction. The tender offer was extended until February 15, 2011, and on
that day, Sanofi-Aventis agreed to purchase Genzyme for $19.3 billion plus a contingent value
right that was dependent on the performance of Genzyme under the veil of Sanofi-Aventis.
Comparison:
The timeline of the takeover of Genzyme by Sanofi-Aventis shows the back and forth
battle that took place. Sometimes a board can become entrenched until a certain price is matched
by the company seeking the takeover, as is the case with this takeover. While this was a big
reason for the hostile takeover to occur, there were other factors involved. This transaction would
have a direct effect on many of Genzyme’s stakeholders. First of all, its consumers who purchase
Genzyme’s drugs would see a difference in price, most likely a drop in price, due to the help of
Sanofi-Aventis and more distribution channels. Genzyme’s shareholders are going to see a rise in
share price of Sanofi-Aventis, on top of the money they are given for their shares (See figure #4
below).
15
A white knight is a third party investor that, on behalf of the target company, attempts to outbid the corporate
raider to save the interests of the target company’s management.

31. Joslyn 30
Graph from: Yahoo! Finance
Since the close of 2010 and the takeover of Genzyme by Sanofi-Aventis, Sanofi-
Aventis’s share price has risen considerably. Sanofi-Aventis’s management promised its
stakeholders a better and more profitable company with this transaction and they followed
through. This transaction was aligned with stakeholder views on both sides. The ethical choices
made by Sanofi-Aventis have allowed the company to prosper, while the unethical choices to
attempt to deny this by Genzyme’s management almost stopped it from happening, as observed
in the previous case.
Sanofi-Aventis, with the acquisition of Genzyme, saw vast growth in 2011 and 2012. The
trend of the earning per share, as seen above is mirrored by their gross profit. In 2011, they saw
gross profits of $31,406,000,000. An increase in 2012 saw a continued growth bringing in gross
profits of $32,774,000,000. The overall plan of the acquisition was to mutually benefit for each
other in many areas, not just an opportunity for Sanofi-Aventis to make money (Yahoo!
Finance).
Figure #4 Sanofi-Aventis Share Price (January 2010 – January 2015)

32. Joslyn 31
Final Conclusion:
When one hears of a hostile takeover, the initial public thought is that one company is
aggressively seeking to take over another company for monetary gain and that it is defending
companies whose actions are ethical. Takeovers are another way to conduct business and better
the company for the good of the stakeholders. Any normal company that sells a product or
service seeks to expand their market and be able to increase business. Combining stakeholder
theory and they idea that takeovers are a way to better a business, there appeared to be a
legitimate claim to the notion that hostile takeovers are not so bad. A case study seemed like the
most logical way to analyze this statement. Looking at the two case studies, the management of
the target company was found to have acted unethically during the initial onset of the hostile
takeover. If the mission of the company was to gain the maximum profit for the stakeholders,
then the target company management should have advised the company’s board to accept the
initial offering, or at least begin negotiations. In both cases, the acquirer company promised to
secure a future for both companies and to expand business with the acquisitions they proposed.

33. Joslyn 32
Appendix A
Initial Press Releases of Endurance Specialty Holdings
And
Sanofi-Aventis16
16
Press Releases are found on the Endurance Specialty Holdings and the Sanofi-Aventis’ websites and are included
in this thesis to help the reader understand the initial timeline and diction of a hostile takeover.

34. Joslyn 33
Endurance Specialty Holdings Press Release
From April 14, 2014

35. Joslyn 34
Endurance Specialty Holdings Proposes to Acquire Aspen Insurance Holdings
$47.50 Per Share Cash and Stock Proposal Provides Highly Attractive Premium for Aspen Shareholders and
Opportunity to Participate in Combined Company's Future Value
Combined Company Will Be Global Leader in Specialty Insurance and Reinsurance, with Increased Scale,
Market Presence, Diversification and Profit Potential
Aspen's Board and Management Have to Date Refused to Engage with Endurance and Are Denying Aspen
Shareholders the Ability to Understand and Attain Significant Benefits of Transaction
PEMBROKE, Bermuda, April 14, 2014 - Endurance Specialty Holdings Ltd. ("Endurance") (NYSE: ENH) today
announced that it has delivered a proposal to the Board of Directors of Aspen Insurance Holdings Limited ("Aspen")
(NYSE: AHL) to acquire all of the common shares of Aspen for $3.2 billion, or $47.50 per Aspen share, with a
combination of cash and Endurance common shares.
The combined company will be a global leader in specialty insurance and reinsurance, with:
 Increased scale, market presence, diversification and profit potential;
 Over $5 billion of combined annual gross premiums written, diversified across products and geographies;
and
 Over $5 billion of pro forma common shareholders equity, yielding a large and strong capital base to
compete in the global market.
Endurance's proposal provides compelling value for Aspen shareholders, including:
 21% premium to Aspen's closing share price on April 11, 2014;
 15% premium to Aspen's all-time high share price of $41.43 on December 31, 2013;
 1.16x Aspen's December 31, 2013 diluted book value per share; and
 13.4x 2014 consensus Street earnings estimates for Aspen.
Each Aspen shareholder will have the right to receive for their Aspen shares, at their election: all cash ($47.50 per
Aspen share); all Endurance common shares (0.8826 Endurance shares for each Aspen share); or a combination of
cash and Endurance common shares. The election will be subject to a customary proration mechanism to achieve
an aggregate consideration mix of 40% cash and 60% Endurance common shares.
John R. Charman, Endurance's Chairman and Chief Executive Officer, said, "This transaction is, quite simply, a
unique opportunity to deliver value to shareholders of both Aspen and Endurance, while creating a new global leader
in the industry. The proposal offers up-front value for Aspen's shareholders, who will receive a substantial premium
for their shares, as well as the opportunity to participate - along with Endurance's shareholders - in future value
created by a stronger and more profitable company.
"The specialized businesses of Endurance and Aspen, such as Endurance's market-leading agriculture insurance
business and Aspen's Lloyd's operations, are highly complementary, and together we will create a company with
increased scale, an attractive diversified platform across products and geographies, and greater market presence
and relevance. The combined company will have a strong balance sheet and capital position, with an enhanced
ability to pursue growth opportunities and to withstand volatility. Further, we believe the combined company will enjoy
increased profitability driven by a strong management team comprised of industry-leading talent and world-class
underwriting expertise from both companies, as well as meaningful transaction synergies," Mr. Charman said.
In connection with the transaction, Endurance expects the combined company to generate synergies exceeding $100
million annually, resulting in significant ROE and EPS accretion in 2015. These synergies will include cost savings,
underwriting improvements, capital efficiencies and enhanced capital management opportunities.

36. Joslyn 35
"Despite our repeated attempts since late January to engage in confidential and friendly discussions, Aspen's Board
and management have rebuffed our proposal and refused to engage with us, thereby denying Aspen's shareholders
the ability to understand and attain the clear financial, operational and strategic benefits of this transaction. We are
fully committed to this transaction and are confident that Aspen's shareholders will recognize the value of our
proposal and actively encourage their Board to begin constructive discussions with Endurance without delay, with the
goal of reaching a negotiated transaction," Mr. Charman added.
The cash consideration to be offered to Aspen shareholders will be funded from Endurance's substantial cash
resources and $1.05 billion of newly issued common shares to investors led by funds advised by CVC Capital
Partners Advisory (U.S.), Inc. and its affiliates, which have already completed due diligence on Endurance and the
merits of the transaction, and have provided an equity commitment letter to Endurance.
Mr. Charman concluded, "Endurance shareholders will also significantly benefit from bringing these two leading
companies together. Reflecting my own deep conviction about the future of Endurance and the benefits of the
combination, I will purchase $25 million of Endurance common shares in connection with this transaction in addition
to the $30 million of personal capital I have already invested in Endurance."
Endurance intends to maintain the headquarters of the combined company in Bermuda, with a significant presence in
London, New York and other key markets.
Endurance's financial advisors in connection with the proposed transaction are Morgan Stanley & Co. LLC and
Jefferies LLC, and its legal counsel is Skadden, Arps, Slate, Meagher & Flom LLP and ASW Law Limited.
Endurance's proposal to the Aspen Board of Directors was communicated in a letter sent this morning, the full text of
which is set forth below.
For additional information about Endurance's proposal to acquire Aspen, including a slide presentation for investors,
please visit www.endurance-aspen.com or ir.endurance.bm.
Text of the April 14, 2014 Letter to the Aspen Board of Directors
April 14, 2014
Board of Directors
c/o Mr. Glyn Jones, Chairman of the Board
Aspen Insurance Holdings Limited
141 Front Street
Hamilton HM 19
Bermuda
Dear Members of the Board:
As you know, we have been trying since late January to engage with Aspen in a confidential and friendly dialogue
regarding a combination of our two companies, and have previously made a specific written proposal that offers your
shareholders a substantial premium valuation. Since you and your management have refused, despite our repeated
attempts, to engage in any discussions with us regarding the compelling value proposition this transaction presents
for your shareholders, we have no choice but to advise them of our proposal directly, which we are doing this
morning.
Our Board of Directors has unanimously approved our proposal, and we remain fully committed to pursuing this
transaction. In the paragraphs below, we (i) reiterate the key terms of our proposal, (ii) reiterate the key strategic and
financial benefits of our proposal and our approach to the transaction and (iii) discuss next steps for making this
mutually beneficial transaction a reality.
Key Terms of Our Proposal
Endurance proposes to acquire all of the common shares of Aspen for $3.2 billion, or $47.50 per Aspen share (based

37. Joslyn 36
on 66.7 million fully diluted Aspen common shares as of February 24, 2014), with a combination of cash and
Endurance common shares.
Each Aspen shareholder will have the right to receive for their Aspen shares, at their election:
 All cash ($47.50 per Aspen share);
 All Endurance common shares (0.8826 Endurance shares for each Aspen share); or
 A combination of cash and Endurance common shares.
The election will be subject to a customary proration mechanism to achieve an aggregate consideration mix of 40%
cash and 60% Endurance common shares.
The cash component of the consideration will be funded from our substantial cash resources and $1.05 billion of
newly issued common shares to investors led by funds advised by CVC Capital Partners Advisory (U.S.), Inc. and its
affiliates, which have already completed due diligence on Endurance and the merits of the transaction, and have
provided an equity commitment letter to Endurance. We would be pleased to share with you a copy of the investors'
equity commitment letter upon the commencement of discussions.
We believe our proposal represents a premium valuation meaningfully in excess of the standalone potential value to
Aspen shareholders:
 21% premium to Aspen's closing share price of $39.37 on April 11, 2014;
 15% premium to Aspen's all-time high share price of $41.43 on December 31, 2013;
 1.16x Aspen's December 31, 2013 diluted book value per share; and
 13.4x 2014 consensus Street earnings estimates for Aspen.
Aspen shareholders who receive cash will receive up-front value that would otherwise take over two years to achieve
based on consensus Street estimates for Aspen's ROE. For those Aspen shareholders who remain invested in the
combined company, our proposal provides the same highly attractive up-front premium as well as the opportunity to
participate in a combined company with meaningfully improved earnings and ROE outlook, with significant additional
upside opportunity over time.
Key Strategic and Financial Benefits of our Proposal
We have devoted significant time and resources, both internal and external, to assessing this transaction over the
past months, and continue to believe it is a unique, transformative transaction for both companies.
 Increased scale and market presence: On a combined basis, the companies will have over $5 billion of
shareholders' equity and over $5 billion of annual gross premiums written, a size equal to or greater than
many of our key competitors. This will create an enterprise of both scale and broad expertise well
positioned to capitalize on the critical distribution relationships within its global markets and more effectively
able to compete in an increasingly challenging market environment.
 Diversified platform across products and geographies: While Endurance and Aspen share certain common
businesses, the relative weighting of each is quite complementary. Aspen's core strength in the London
insurance market - including through Lloyd's - is an attractive area where Endurance has significant
management experience but currently has limited market presence. In addition, while Endurance has a
market-leading and profitable agriculture insurance business in the U.S. that is uncorrelated with traditional
property and casualty insurance and reinsurance, as well as a highly profitable global catastrophe
reinsurance business, Aspen has historical strength in marine and energy lines. These are just a few
examples where each company's relative strengths are a natural fit and where, on a combined basis, the
two companies can form a market leader of significant importance to brokers and customers.
 Enhanced profit potential: While a key strategic rationale for this transaction is the enhanced scale and
diversification evident in the combined company, as described above, we believe the combination of a
strong management team comprised of industry-leading talent and world-class underwriting expertise from

38. Joslyn 37
both companies, and expected transaction synergies exceeding $100 million annually (including cost
savings, underwriting improvements, capital efficiencies, and enhanced capital management opportunities)
will enable significantly improved profit potential.
 Strengthened balance sheet and capital position: With a pro forma combined shareholders' equity as of
December 31, 2013 of $5.4 billion and total capital of $7.6 billion, the combined Endurance and Aspen will
have a significantly enhanced capital position, which will allow the combined company to more meaningfully
pursue growth opportunities and better withstand volatility. We also believe the added diversification of the
business has the potential to create capital efficiencies. Through the unique combination of our businesses
we also believe this added diversification, significantly increased size, as well as the combined strength of
reserves and investments from both companies, will be viewed favorably by rating agencies.
Reflecting my own deep conviction about the future of Endurance and the benefits of the combination, I will purchase
$25 million of Endurance common shares in connection with this transaction in addition to the $30 million of personal
capital I have already invested in Endurance.
Our Approach to the Transaction
This transaction is not only highly beneficial to Aspen's shareholders, but also to Aspen's employees, customers,
brokers and other constituencies. In this regard, we have developed what we believe is a constructive set of guiding
principles for a transaction with Aspen:
 Aspen's team is crucial to the success of the combined company: The retention of key members of the
Aspen management team, underwriters and employees will be critical to the success of the combined
business.
 The entrepreneurial cultures of our two companies will blend together well, yielding a combined entity that is
strongly positioned to address changes facing the markets in which we operate. Aspen's collaborative,
teamwork-oriented culture will integrate seamlessly with Endurance's collegial environment. Within the past
year, many talented and experienced people in the industry have chosen to join Endurance in light of their
enthusiasm for our business plan and strategic vision.
 Respect for Aspen's franchise and deep customer relationships: We have great respect for the Aspen
franchise and its relationships with its key customers, as reflected in the purchase price we are willing to
pay. As a result, we envision working together to enhance the combined company's customer and broker
relations.
 The execution of this transaction will enhance the strengths of each company: The planning of the
integration of overlapping areas will be well executed, sensitive to all views and issues, and will draw and
build upon the strengths of each organization. It is our intention to maintain the headquarters of the
combined company in Bermuda, with a significant presence in London, New York and other key markets.
Next Steps
As would be the case in any M&A transaction, consummation of the transaction is subject to completion of customary
due diligence, execution of a definitive merger agreement and receipt of required shareholder and regulatory
approvals. We are confident that all required regulatory approvals will be obtained on a timely basis.
We propose working in parallel on definitive documents and our mutual due diligence review in order to enter into a
transaction expeditiously. We are prepared to enter into a mutual non-disclosure agreement, deliver to you a draft
merger agreement and commence due diligence immediately. In light of the significant ownership that your
shareholders will have in the combined company, we are prepared for you and your advisors to also perform
customary due diligence on Endurance. Our financial advisors at Morgan Stanley & Co. LLC and Jefferies LLC, and
our legal advisors at Skadden, Arps, Slate, Meagher & Flom LLP and ASW Law Limited, stand ready to coordinate
with your advisors on next steps.
We look forward to commencing constructive discussions with Aspen regarding our proposal in the coming days.

39. Joslyn 38
Yours sincerely,
John R. Charman
Chairman and Chief Executive Officer
Endurance Specialty Holdings Ltd.
About Endurance Specialty Holdings
Endurance Specialty Holdings Ltd. is a global specialty provider of property and casualty insurance and reinsurance.
Through its operating subsidiaries, Endurance writes agriculture, professional lines, property, and casualty and other
specialty lines of insurance and catastrophe, property, casualty, professional liability and other specialty lines of
reinsurance. We maintain excellent financial strength as evidenced by the ratings of A (Excellent) from A.M. Best (XV
size category) and A (Strong) from Standard and Poor's on our principal operating subsidiaries. Endurance's
headquarters are located at Wellesley House, 90 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address
is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda. For more
information about Endurance, please visit www.endurance.bm.
Cautionary Note Regarding Forward-Looking Statements
Some of the statements in this press release may include forward-looking statements which reflect our current views
with respect to future events and financial performance. Such statements may include forward-looking statements
both with respect to us in general and the insurance and reinsurance sectors specifically, both as to underwriting and
investment matters. These statements may also include assumptions about our proposed acquisition of Aspen
(including its benefits, results, effects and timing). Statements which include the words "should," "would," "expect,"
"intend," "plan," "believe," "project," "anticipate," "seek," "will," and similar statements of a future or forward-looking
nature identify forward-looking statements in this press release for purposes of the U.S. federal securities laws or
otherwise. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-
looking statements in the Private Securities Litigation Reform Act of 1995.
All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or may be
important factors that could cause actual results to differ materially from those indicated in the forward-looking
statements. These factors include, but are not limited to, the effects of competitors' pricing policies, greater frequency
or severity of claims and loss activity, changes in market conditions in the agriculture insurance industry, termination
of or changes in the terms of the U.S. multiple peril crop insurance program, a decreased demand for property and
casualty insurance or reinsurance, changes in the availability, cost or quality of reinsurance or retrocessional
coverage, our inability to renew business previously underwritten or acquired, our inability to maintain our applicable
financial strength ratings, our inability to effectively integrate acquired operations, uncertainties in our reserving
process, changes to our tax status, changes in insurance regulations, reduced acceptance of our existing or new
products and services, a loss of business from and credit risk related to our broker counterparties, assessments for
high risk or otherwise uninsured individuals, possible terrorism or the outbreak of war, a loss of key personnel,
political conditions, changes in accounting policies, our investment performance, the valuation of our invested assets,
a breach of our investment guidelines, the unavailability of capital in the future, developments in the world's financial
and capital markets and our access to such markets, government intervention in the insurance and reinsurance
industry, illiquidity in the credit markets, changes in general economic conditions and other factors described in our
Annual Report on Form 10-K for the year ended December 31, 2013. Additional risks and uncertainties related to the
proposed transaction include, among others, uncertainty as to whether Endurance will be able to enter into or
consummate the transaction on the terms set forth in the proposal, the risk that our or Aspen's shareholders do not
approve the transaction, potential adverse reactions or changes to business relationships resulting from the
announcement or completion of the transaction, uncertainties as to the timing of the transaction, uncertainty as to the
actual premium of the Endurance share component of the proposal that will be realized by Aspen shareholders in
connection with the transaction, competitive responses to the transaction, the risk that regulatory or other approvals
required for the transaction are not obtained or are obtained subject to conditions that are not anticipated, the risk that
the conditions to the closing of the transaction are not satisfied, costs and difficulties related to the integration of
Aspen's businesses and operations with Endurance's businesses and operations, the inability to obtain, or delays in
obtaining, cost savings and synergies from the transaction, unexpected costs, charges or expenses resulting from the
transaction, litigation relating to the transaction, the inability to retain key personnel, and any changes in general

40. Joslyn 39
economic and/or industry specific conditions.
Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation
publicly to update or revise any forward-looking statement, whether as a result of new information, future
developments or otherwise.
Regulation G Disclaimer
In this press release, Endurance has included certain non-GAAP measures. Endurance management believes that
these non-GAAP measures, which may be defined differently by other companies, better explain the proposed
transaction in a manner that allows for a more complete understanding. However, these measures should not be
viewed as a substitute for those determined in accordance with GAAP. For a complete description of non-GAAP
measures and reconciliations, please review the Investor Financial Supplement on Endurance's website at
www.endurance.bm.
Return on Equity (ROE) is comprised using the average common equity calculated as the arithmetic average of the
beginning and ending common equity balances for stated periods.
Third Party-Sourced Information
Certain information included in this press release has been sourced from third parties. Endurance does not make any
representations regarding the accuracy, completeness or timeliness of such third party information. Permission to
cite such information has neither been sought nor obtained.
All information in this press release regarding Aspen, including its businesses, operations and financial results, was
obtained from public sources. While Endurance has no knowledge that any such information is inaccurate or
incomplete, Endurance has not had the opportunity to verify any of that information.
Additional Information
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval.
All references in this press release to "$" refer to United States dollars.
The contents of any website referenced in this press release are not incorporated by reference herein.
Contacts:
Endurance Specialty Holdings Ltd.
Investor Relations
Phone: +1 441 278 0988
Email: investorrelations@endurance.bm
Media Relations
Ruth Pachman and Thomas Davies
Kekst and Company
Phone: 212 521 4891/4873
Email: Ruth-Pachman@kekst.com and Tom-Davies@kekst.com
(Press release is from the Investor Relation section of ir.endurance.bm. The Investor Relations page includes
a Press Releases section that keeps a detailed record of Endurance’s Press Releases.)
Re
lease

41. Joslyn 40
Sanofi-Aventis Press Release
From August 29, 2010

42. Joslyn 41
Sanofi-aventis Announces Non-Binding Offer
to Acquire Genzyme
- $69 Per Share All-Cash Offer Represents Immediate and Certain
Value
and a Significant Premium for Genzyme Shareholders -
- Transaction Would Help Genzyme Achieve its Vision of Making a
Positive Impact
on the Lives of People with Serious Diseases -
- Transaction Would Enhance sanofi-aventis’ Sustainable Growth
Strategy -
Paris, France - August 29, 2010 - Sanofi-aventis (EURONEXT: SAN and NYSE: SNY)
announced today that it has submitted a non-binding proposal to acquire Genzyme (NASDAQ:
GENZ) in an all-cash transaction valued at approximately $18.5 billion.
Under the terms of the proposed acquisition, Genzyme shareholders would receive $69 per
Genzyme share in cash, representing a 38% premium over Genzyme’s unaffected share price
of $49.86 on July 1, 2010. Sanofi-aventis’ offer also represents a premium of almost 31% over
the one-month historical average share price through July 22, 2010, the day prior to press
speculation that sanofi-aventis had made an approach to acquire Genzyme. Based on analyst
consensus estimates, the offer represents a multiple of 36 times Genzyme’s 2010 earnings per
share and 20 times 2011 earnings per share. Accordingly, the offer price takes into account the
upside potential of the anticipated recovery in Genzyme’s performance in 2011. Sanofi-aventis
has secured financing for its offer.
The non-binding offer, which was made on July 29, 2010, was reiterated in a letter sent today to
Genzyme’s Chairman, President and Chief Executive Officer, Henri A. Termeer, after several
unsuccessful attempts to engage Genzyme’s management in discussions. Sanofi-aventis is
disclosing the contents of its letter in order to inform Genzyme’s shareholders of the significant
shareholder value and compelling strategic fit inherent in a combination of the two companies.
Genzyme is a leading bio-pharmaceutical company based in Cambridge, Massachusetts. Its
products address rare diseases, kidney disease, orthopedics, cancer, transplant and immune
diseases, and diagnostic testing. Sanofi-aventis’ global reach and significant resources would
allow Genzyme to accelerate investment in new treatments, enhance penetration in existing
markets and expand further into emerging markets. The combination of both companies would
create a global leader in developing and providing novel treatments, giving both companies
significant new growth opportunities.
“A combination with Genzyme represents a compelling opportunity for both companies and our
respective shareholders and is consistent with our sustainable growth strategy,” said
Christopher A. Viehbacher, Chief Executive Officer of sanofi-aventis. “Sanofi-aventis shares
Genzyme’s commitment to improving the lives of patients, and our global reach and resources
can help the company better navigate the issues it faces today. The all-cash offer provides
immediate and certain value for Genzyme shareholders at a substantial premium that
recognizes the company’s upside potential, while Sanofi-aventis shareholders would benefit

43. Joslyn 42
from the accretion and the attractive growth prospects of this combination. Now is the right time
for Genzyme to consider a transaction that maximizes value for its shareholders. Sanofi-aventis
believes strongly in this acquisition and its strategic and financial benefits.We remain focused
on entering into constructive discussions with Genzyme in order to complete this
transaction.”
Sanofi-aventis has a strong track record of successfully acquiring and integrating a diverse
range of businesses and has consistently demonstrated its commitment to allow affiliates to
focus on their core competencies. Sanofi-aventis intends to make Genzyme its global center for
excellence in rare diseases and further increase sanofi-aventis’s presence in the greater Boston
area.
At this stage, there can be no assurance that any agreement could be reached between the two
companies. Sanofi-aventis is prepared to consider all alternatives to successfully complete this
transaction.
Conference Call
Sanofi-aventis will hold a call for investors and analysts on Monday, August 30, 2010 at 8:30
a.m. ET / 2:30 p.m. CET to discuss the proposal. Those wishing to listen and participate should
dial one of the following numbers:
France: +33-(0)1-72-00-13-68
UK: +44-(0) 203-367-94-53
US: +1-866-907-59-23
***
Below is the full text of the letter sent today.
August 29, 2010
VIA EMAIL, TELECOPIER AND DHL
Mr. Henri A. Termeer
Chairman, President and Chief Executive Officer
Genzyme Corporation
500 Kendall Street
Cambridge, Massachusetts 02142
USA
Dear Henri
As you are aware, I have been trying to engage with you regarding a potential
acquisition for the past few months. As a consequence of your unwillingness even to meet
with us, we sent you a detailed, written proposal on July 29, 2010. We believe that this
proposal to acquire all of the issued and outstanding shares of Genzyme for $69.00 per share in
cash is compelling for Genzyme’s shareholders and represents substantial value for them.

44. Joslyn 43
We are disappointed that you rejected our proposal on August 11 without discussing
its substance with us. After our repeated requests, you agreed only to let our respective financial
advisors hold a meeting of limited scope. Our financial advisors finally met briefly on August
24, but the meeting simply served as further confirmation that as throughout you remain
unwilling to have constructive discussions. As I have mentioned to you, we are committed to a
transaction with Genzyme, and, therefore, we feel we are left with no choice but to take our
compelling proposal directly to your shareholders by making its terms public.
Sanofi-Aventis’ fully-financed, all-cash offer to acquire all of the issued and outstanding
shares of Genzyme’s common stock for $69.00 per share represents a very significant premium
of 38% over Genzyme’s unaffected share price of $49.86 on July 1, 2010. Our offer also
represents a premium of almost 31% over the one-month historical average share price through
July 22, 2010, the day prior to press speculation that Sanofi-Aventis had made an approach to
acquire Genzyme. Based on the analysts’ consensus estimates, this represents a multiple of 36
times 2010 EPS and 20 times 2011 EPS, which takes into account the expected recovery of
Genzyme’s performance in 2011.
We believe that now is the right time for you and the Genzyme Board to consider a
potential transaction that maximizes value for Genzyme’s shareholders. Genzyme has
underperformed its peers for a number of years. It continues to face several significant and well-
documented challenges that were discussed thoroughly during this year’s proxy campaign, and
which Genzyme recently disclosed will take three to four years to resolve. An acquisition by
Sanofi-Aventis would not only position Genzyme to overcome these challenges quickly and
successfully by applying Sanofi-Aventis’ global resources and expertise to help realize
Genzyme’s business strategy, but also deliver near-term compelling value to Genzyme’s
shareholders that takes into account the company’s future upside potential.
As I explained in my July 29 letter, the proposed transaction would provide several key
benefits to Genzyme, its shareholders, employees and the patients and physicians it serves,
including:
 Achievement of Genzyme’s Vision: Sanofi-Aventis would put its full resources
behind Genzyme to invest in developing new treatments, enhance penetration in
existing markets and further expand into emerging markets. Genzyme would be
able to leverage Sanofi-Aventis’ strong global footprint and its manufacturing
expertise in order to address Genzyme’s manufacturing issues.
 Center of Excellence: Sanofi-Aventis already recognizes the strategic importance
of the greater Boston area as evidenced by the establishment of Sanofi-Aventis’
oncology and vaccines research units in Cambridge. Genzyme would become the
global center for excellence for Sanofi-Aventis in rare diseases and further increase
Sanofi-Aventis’ presence in the greater Boston area.
 Continuation of Genzyme’s Legacy within Sanofi-Aventis: Genzyme’s rare
disease business would be managed as a stand-alone division under the Genzyme
brand, with its own R&D, manufacturing and commercial infrastructure, similar to
how Sanofi-Aventis has handled other recent transactions. Genzyme’s management
and employees would play a key role within Sanofi-Aventis following the
acquisition.

45. Joslyn 44
 Fully Financed, All-Cash Premium Offer: The purchase price would be paid in
cash, offering immediate, substantial and certain value for Genzyme’s shareholders.
Our offer is fully financed and is not subject to a financing contingency.
As I indicated in my July 29 letter to you, in addition to these compelling reasons, we
believe there are many others that demonstrate why Sanofi-Aventis is the right partner for
Genzyme. Sanofi-Aventis has significant expertise executing and integrating acquisitions, and a
strong track record of creating value through those acquisitions by enhancing their performance
through leveraging Sanofi-Aventis’ capabilities. Sanofi-Aventis has demonstrated that it is a
good corporate partner by enabling its affiliates to maintain their distinctive culture and focus on
their core strengths. Sanofi-Aventis is strong financially with a market capitalization of
approximately $75 billion, annual revenue of approximately $38 billion and annual EBITDA of
approximately $16 billion. From Sanofi-Aventis’ perspective, the proposed transaction would
provide a new sustainable growth platform.
It is our preference to work together with you and the Genzyme Board to reach a
mutually agreeable transaction. As we have consistently stated, we place value on the ability to
engage in a constructive dialogue and to conclude a successful outcome that would ensure a
timely and smooth integration.
We have engaged and have been working closely with Evercore Partners and J.P.
Morgan, as lead financial advisors, and Weil, Gotshal, as legal counsel. As explained in my
July 29 letter, we have completed an extensive analysis of Genzyme and have carefully
considered the proposed transaction on the basis of publicly available information. We do not
believe that there are any regulatory or other impediments to consummation of the proposed
transaction. We could complete our confirmatory due diligence and finalize the terms of a
transaction in a two-week period.
Sanofi-Aventis is committed to a transaction with Genzyme. Given the substantial value
represented by our offer and the other compelling benefits of a transaction, we are confident that
Genzyme’s shareholders will support our proposal. We have taken the step of making this letter
public, so as to explain directly to your shareholders our proposal, our actions and our
commitment. Your continued refusal to enter into constructive discussions will serve only to
further delay the ability of your shareholders to receive the substantial value represented by our
all-cash offer. We therefore are prepared to consider all alternatives to complete this transaction.
Our team and advisors are ready to meet with you and your team immediately to discuss our
proposal and to move things forward expeditiously.
Yours sincerely,
Sanofi-Aventis
By : /s/ Christopher A. Viehbacher
Christopher A. Viehbacher
Chief Executive Officer
cc: Board of Directors, Genzyme Corporation

46. Joslyn 45
***
About sanofi-aventis
Sanofi-aventis, a leading global pharmaceutical company, discovers, develops and distributes
therapeutic solutions to improve the lives of everyone. Sanofi-aventis is listed in Paris
(EURONEXT:SAN) and in New York (NYSE: SNY).
Additional Information
This communication does not constitute an offer to buy or solicitation of an offer to sell any securities. No
tender offer for the shares of Genzyme Corporation ("Genzyme") has commenced at this time. In
connection with the proposed transaction Sanofi-aventis ("Sanofi-aventis") may file tender offer
documents with the U.S. Securities and Exchange Commission ("SEC"). Any definitive tender offer
documents will be mailed to shareholders of Genzyme. INVESTORS AND SECURITY HOLDERS OF
GENZYME ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
security holders will be able to obtain free copies of these documents (if and when available) and other
documents filed with the SEC by Sanofi-aventis through the web site maintained by the SEC at
http://www.sec.gov.
Forward-Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts.
These statements include projections and estimates and their underlying assumptions, statements
regarding plans, objectives, intentions and expectations with respect tofuture financial results, events,
operations, services, product development and potential, and statements regarding futureperformance.
Forward-looking statements are generally identified by the words “expects,” “anticipates,” “believes,”
“intends,”“estimates,” “plans” and similar expressions. Although sanofi-aventis’ management believes that
the expectations reflected in such forward-looking statements are reasonable, investors are cautioned
that forward-looking information and statements are subject to various risks and uncertainties, many of
which are difficult to predict and generally beyond the control of sanofi-aventis, that could cause actual
results and developments to differ materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and uncertainties include among other things,
the uncertainties inherent in research and development, future clinical data and analysis, including post
marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when
to approve any drug, device or biological application that may be filed for any such product candidates as
well as their decisions regarding labelling and other matters that could affect the availability or commercial
potentialof such products candidates, the absence of guarantee that the products candidates if approved
will be commercially successful, the future approval and commercial success of therapeutic alternatives,
the Group’s ability to benefit from external growth opportunities as well as those discussed or identified in
the public filings with the SEC and the AMF made by sanofi-aventis,including those listed under “Risk
Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in sanofi-aventis’annual
report on Form 20-F for the year ended December 31, 2009. Other than as required by applicable law,
sanofi-aventis does not undertake any obligation to update or revise any forward-looking information or
statements.
(Press release is from the Media section of en.sanofi.com. The Media page includes a Press Releases section
that keeps a detailed record of Sanofi’s Press Releases.)

47. Joslyn 46
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