PartnerRe Ltd's board of directors has rejected the buyout bid from Italian investment company Exor and offered a sweetened deal for shareholders to complete its proposed merger with Bermuda rival Axis Capital Holdings Ltd.In a statement released this morning, PartnerRe said it had renegotiated the Axis merger terms in order to pay out an $11.50 per share special dividend to PartnerRe shareholders on the closing of the deal.The statement added that the PartnerRe board had held “extensive discussions” with Exor, the investment arm of the Agnelli family, whose business empire includes a large stake in Chrysler Fiat.Exor's $130 per share cash bid, which amounts to $6.4 billion, “significantly undervalues” PartnerRe, according to the statement. During the negotiations, said the Bermuda reinsurer, Exor had made it clear that it would not budge on price.PartnerRe Chairman Jean-Paul Montupet said: “Over the course of the past three weeks, the board, as well as our advisers, engaged extensively with Exor and conducted a very careful and thorough evaluation of the many aspects of their proposal, including price.“Throughout these discussions, Exor made it abundantly clear that it was not willing to adjust its price. The Board concluded that Exor's proposal significantly undervalued PartnerRe and that there was no prospect of the offer leading to a superior proposal.“Consequently, we determined that further discussion would not be productive and we have rejected their proposal.”The $11.50 per share special dividend added to the Axis merger terms will “appropriately recognise for our shareholders the significant value of our company”, PartnerRe said. The dividend will be paid to former PartnerRe shareholders on completion of the merger.Mr. Montupet added: “We continue to be very excited by the prospects of our amalgamation with Axis Capital, which we firmly believe will create value well in excess of the proposal made by Exor, and will give shareholders the opportunity to be a part of a world-class specialty insurance and reinsurance franchise and to share in the value such a combination will generate well into the future.”The companies aim to achieve $200 million a year cost savings through their combination.