Validus Holdings Ltd. has upped the ante in the race to acquire IPC Holdings Ltd. by increasing its offer to IPC shareholders.

Under the Bermuda reinsurer's latest offer, IPC shareholders would receive $3.75 in cash for each IPC common share, an increase of 75 cents per share from its previous offer, as well as 1.1234 Validus voting common shares

Validus is aiming to scupper Bermuda rival Max Capital Group Ltd.'s proposed merger, which is set to be decided on Friday.

The Validus offer was valued at $30.67 per share based on Validus' closing price on Friday and represented a 9.8 percent premium to IPC's closing price that day and a 24.9 percent premium based on the closing prices of Validus and IPC on March 30, 2009, the last trading day before the announcement of Validus' initial offer.

"This significant cash increase maintains the clear superiority of Validus' offer," said Ed Noonan, Validus' chairman and CEO.

"Unlike the proposed amalgamation with Max, the Validus offer provides a substantial premium to IPC shareholders, a significantly larger cash component, and the opportunity to benefit from being part of a much stronger, far more profitable, and well diversified company. We are fully committed to providing IPC shareholders with the superior economics of our offer if the proposed Max amalgamation is rejected at IPC's shareholders meeting on June 12."

Last week, The Royal Gazette reported that IPC had been offered a cash enticement of $2.50 per share to vote in favour of the planned merger with Max Capital.

The money would 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 Friday's vote by IPC and Max shareholders on the merger deal.

Last month, Validus had increased its bid to about $1.7 billion, or $30.14 per share, only to be turned down by IPC's board.

Shares of Validus fell 14 cents to $23.82 in afternoon trading, while IPC lost 75 cents, or 2.7 percent, to $27.19. Shares of Max Capital fell 35 cents, or 2.1 percent, to $16.60.