Exor committed to $6.4 billion spurned offer for PartnerRe
May 04, 2015 07:02 PM EDT
May 04, 2015 07:02 PM EDT
Italy's Exor (EXOR.MI) said on Monday it remained fully committed to its $6.4 billion offer for PartnerRe (PRE.N) after the Bermuda-based reinsurer rejected its attempt to trump a bid by Axis Capital Holdings (AXS.N).
Exor's decision to press ahead with its offer means PartnerRe shareholders will have to decide which deal is sweeter, and indicates it is unlikely to raise its bid for now.
The Italian holding company, controlled by the Agnelli family, made its all-cash offer for PartnerRe in April, disrupting an $11 billion all-share deal between Axis and PartnerRe to create one of the world's largest reinsurers.
But earlier on Monday, PartnerRe said it had rejected Exor's proposal, arguing it undervalued the company.
In a joint statement, PartnerRe and Axis said their merger deal would now also include a one-off cash dividend of $11.5 per share for PartnerRe shareholders, when it closes in the third quarter.
On a call with analysts, PartnerRe Chairman Jean-Paul Montupet said it was not a good time to sell due to the low valuations of insurers. He said Exor was trying to bag PartnerRe at a very low price.
"We didn't get to the stage where we could have allowed them to do due diligence," Montupet said, adding he had no indication Exor would launch a hostile bid.
Exor said it still considered its proposal superior and PartnerRe investors would have to make up their minds.
"Axis' revised transaction still undervalues PartnerRe," it said in a statement. "Exor is therefore determined to pursue its transaction on the proposed terms and is fully committed to achieving its rapid completion."
Exor, which controls carmaker Fiat Chrysler Automobiles FCHA.N, is offering $130 per PartnerRe share, or a 16 percent premium to the implied value under the original Axis agreement.
Exor boss John Elkann, a scion of Fiat's founding Agnelli family, is keen to branch out into the financial service sector with its steadier and higher returns.
The Italian firm said on Monday the special dividend offered in the Axis deal would reduce PartnerRe's capital by more than $550 million and significantly weaken the reinsurer's financial strength.
Axis and PartnerRe said they still expected savings of more than $200 million from their merger.
In April, PartnerRe's second-biggest shareholder told Reuters that Exor's offer was "much superior" to a deal with Axis.
Exor shares rose 1.5 percent on Monday while the Italian blue-chip index .FTMIB closed up 0.7 percent. PartnerRe shares were down 1.5 percent at 1725 GMT.
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