Reinsurance firm PartnerRe yesterday urged its shareholders to back a merger with rival Axis Capital — and accused hostile bidder Exor of “misleading or outright false statements”.

The attack on the Italian investment firm, which launched a $6.8 billion takeover bid for PartnerRe after it agreed terms for a merger with Axis, came only weeks before shareholders in PartnerRe and Axis are due to vote on the deal.

The letter said: “The proposal by Exor to acquire PartnerRe at a price of $137.50 a share does not properly or adequately value PartnerRe as it does not fully recognise the strength of our balance sheet and the value of the franchise and its future prospects.

“This price would essentially only approximate PartnerRe’s expected stand-alone book value at 2015 year-end.”

And PartnerRe told shareholders: “Tt does not come close to paying you the full intrinsic value of your investment. The price is a non-starter.”

The salvo is the latest in a running battle for control of the firm.

PartnerRe said the merger with Axis would create “an industry powerhouse” with gross premiums written of more than $10 billion, around $13 billion in combined shareholders’ equity as well as cash and invested assets of more than $31 billion.

The letter added: “The merger will significantly strengthen the company’s balance sheet and capital generation and provide capital deployment flexibility, including immediately returning $750 million to shareholders of the combined companies following closing of the transaction and an additional expected $2.2 billion of buy-backs and dividends expected through 2017, equivalent to 100 per cent of operating earnings.”

And the firm said the merger would save $200 million a year in operating costs, partly through job losses, which would “generate even greater value over the short term”.

Exor raised its original $6.4 billion bid for PartnerRe — equivalent to $130 a share — to $6.8 billion, or $137.50 a share, in May. 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 — 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 9.9 per cent shareholding in PartnerRe, the largest single shareholder in the reinsurer.