Reinsurance firm PartnerRe is to hold talks with Italian firm Exor in a bid to push up its $6.8 billion rival offer to the proposed merger with Axis.

PartnerRe said it had been given a waiver by Axis to open talks with Exor — but repeated its commitment to the deal with Axis.

PartnerRe chairman Jean-Paul Montupet said: “PartnerRe’s board of directors is open-minded and focused on creating value for our shareholders.

“Although we were disappointed that Exor has made misleading statements regarding our prior discussions, we are interested in a proposal that may lead to superior value for our shareholders.”

Mr Montupet added: “While we believe that PartnerRe is worth materially more than Exor has offered and the terms they have proposed are deficient, we stand ready to negotiate with Exor in good faith to determine their willingness to propose a transaction that, taking into account price, closing certainty, timing and other terms, is in the best interests of our shareholders.”

Exor raised its original $6.4 billion bid for PartnerRe — equivalent to $130 a share — to $6.8 billion, or $137.50 a share, earlier this month.

The cash deal went up against the all-share merger proposition and Exor said it intended to retain PartnerRe as a stand-alone company and keep existing management and staff.

The Axis PartnerRe deal would create the world’s fifth largest reinsurer and the two companies have said joining forces would save $200 million a year — with some of the savings from redundancies among the combined Bermuda-based staff of around 130.

And the two reinsurance firms — near-neighbours on Pitts Bay Road in Pembroke — would also probably require less office space.

After PartnerRe rejected Exor’s initial bid, it announced a sweetener for shareholders — an $11.50 per share special dividend for shareholders if the $11 billion merger was completed.

The “break fee” — payable if one of the companies walked away from the deal — was also increased from $250 million to $280 million.

But Exor, controlled by the billionaire Agnelli family, whose business empire includes a large stake in carmaker Fiat Chrysler and Turin-based top flight football club Juventus, said the revised Axis-PartnerRe deal was “a clear admission” that the proposal had undervalued PartnerRe.

And Exor added that the special dividend would eat into PartnerRe’s capital to the tune of $550 million and weaken its financial strength.

Exor has built up a 9.3 per cent shareholding in PartnerRe, the largest single shareholder in the reinsurer.

The firm’s proposal was backed by another large shareholder, Franklin Mutual Advisers, which held a 4.6 per cent share in PartnerRe at the end of last year.

Franklin Mutual Advisers chief executive Peter Langerman said the Exor bid was “much superior” to the January Axis-PartnerRe deal — and added his company had expressed concern over the merger when it was announced in January.