IPC Holdings Ltd. have been offered a cash enticement of $2.50 per share to vote next week in favour of the planned merger with fellow Bermuda re/insurer Max Capital Group Ltd.

The money will be paid in the form of two dividends. The first will be $1.50 per share, payable to IPC shareholders of record as of June 15, 2009 -three days after next Friday's vote by IPC and Max shareholders on the merger deal.

The second dividend of $1 per share will be payable to shareholders following closing of the transaction.

A joint statement by Max and IPC yesterday said that Max shareholders will also receive a cash dividend of $1 per share in cash for each share of IPC following the closing of the transaction, which is equal to $0.64 for each share of Max prior to exchange from the closing of the transaction.

The move comes as Validus Holdings Ltd, another Bermuda-based reinsurer, is offering IPC shareholders $3 in cash per share as part of its hostile takeover bid.

Validus is trying to persuade IPC shareholders to vote against the Max merger next Friday in order to push forward with its takeover ambitions.

"The powerful strategic rationale and value creation potential of the IPC-Max transaction enjoys strong investment community support and we look forward to the completion of our transaction following the shareholder meeting," Max chairman and CEO Marston Becker said.

"We have agreed to return a portion of the combined company's substantial cash flow and excess capital to all shareholders, and also increase the absolute value of the transaction to IPC shareholders."

IPC chairman Kenneth Hammond said: "The agreed-to dividends make an excellent transaction even more rewarding to both IPC shareholders and to all of the shareholders of the combined company.

"The IPC-Max transaction will create a world-class insurer/reinsurer, well positioned for long-term success and superior shareholder value creation through enhanced diversification, scale and capital.

"The hostile offer by Validus, on the other hand, is inferior from a valuation standpoint, is fraught with uncertainty, and only serves the interests of Validus."

Max and IPC shareholders will own 42 percent and 58 percent respectively on a fully diluted basis of the combined company.