merge in a stock swap, are now offering to pay some of their stockholders up to $300 million in cash for their shares at the time of the merger.

EXEL, which owns 26.82 percent of Mid Ocean, is paying about $2.2 billion for the rest of the company. The transaction is expected to close this summer.

The latest move will give stockholders the option to receive cash for their shares instead of stock of the new company. EXEL, which plans to repurchase up to $500 million of its stock, will use part of its buyback authorisation to pay shareholders.

"This (option) would facilitate our buying back of shares at the time of the merger,'' said Gavin R. Arton, EXEL's vice president of investor relations.

If the $300 million limit is reached, EXEL shareholders will get up to $204 million of the cash, and holders Mid Ocean will be allowed $96 million.

The amount shareholders will get for their stock will be calculated from the average price of EXEL's shares in the ten days before the merger. Mid Ocean shareholders will get 1.0215 Exel shares -- or the cash equivalent -- for each Mid Ocean share they hold.

EXEL decided to buy Mid Ocean to increase its size and help it cut costs. It expects the combination will allow it to cut $15 million in annual costs and sell a broader line of insurance.