CIBC steps up for Fairfax

CIBC World Markets showed its chops Tuesday by leading a $1-billion (U.S.) bought deal for insurer Fairfax Financial Holdings.

Fairfax needs cash to pay for its proposed $960-million buy in of subsidiary Odyssey Re Holdings, a purchase that would clean up the parent company's corporate structure.

The bought dealer will see CIBC World Markets serve as book runner on an eight dealer syndicate, with the investment banks purchasing stock from the insurer at the same price Fairfax shares closed at Friday on the New York Stock Exchange - $347 per share. The dealers then shoulder the risk of selling these shares to the public.

There are three other Canadian bank-owned dealers in the syndicate - Scotia Capital, BMO Nesbitt Burns and RBC Dominion Securities, two independent domestic houses - Cormark Securities and GMP Securities - and two global dealers.

Odyessy's independent directors are now weighing a $60-a-share bid for the 27-per-cent of the company that Fairfax does not own. They hired Simpson Thacher & Bartlett as legal counsel and Sandler O'Neill & Partners, L.P. as financial advisers to evaluate the bid.