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Exor to PartnerRe: Say our bid is superior

Italian investment company Exor yesterday said it was prepared to discuss its $6.8 billion offer for target PartnerRe — but only if the Bermuda firm’s board agrees the rival offer is a better deal than a proposed merger with Axis Capital.

And it delivered an ultimatum to the PartnerRe to set a date for a shareholders’ meeting so they could vote on which offer is in their best interests.

PartnerRe said on Tuesday it would hold talks with Exor — but insisted the bid should be upped.

Exor put in a rival bid after PartnerRe set up a deal with rival Axis Capital to merge in a share-only deal — but Exor stepped in with a cash offer which it said offered a better option for PartnerRe shareholders.

Now Exor has said it will “negotiate in good faith to provide PartnerRe shareholders with improved closing certainty with regards to its binding all-cash $137.50 offer”.

Exor added: “Exor is prepared to commence these discussions once the board of PartnerRe declares that Exor’s binding offer is reasonably likely to be a superior proposal, which is the process called for under the PartnerRe agreement with Axis Capital Holdings.”

Exor added it had written a letter to the board of PartnerRe which said its $137.50 a share offer raised from the original $130 — was a ten per cent premium on the implied share value in the Axis agreement, based on the Axis share price on May 5.

The Italian investment company, controlled by the billionaire Agnelli family, added that Exor had already spent $609 million in cash to build up a shareholding of nearly ten per cent in PartnerRe — the company’s biggest single shareholder.

The letter from Exor chairman and CEO John Elkann said: “Exor will negotiate in good faith to provide PartnerRe’s shareholders with increased closing certainty over and above that which was provided under the approved Axis agreement.

“Exor urges the board of PartnerRe to acknowledge its binding all-cash offer is reasonably likely to be a superior proposal.

“Failing that, Exor asks the PartnerRe board to announce a record date and a date for a shareholder meeting to allow shareholders to decide what is in their best interests.”

Exor added that attempts to portray its bid as having “low closing certainty” were inaccurate.

The letter to PartnerRe said there was no major regulatory risks to the Exor offer and its bid did not require “a complex integration plan, a change in management of the regulated insurance companies or any change in the business plan of the insurance companies, not is it dependent on synergies being realised.”

The letter added that a sweetener deal to give PartnerRe shareholders an $11.50 a share special dividend of the merger with Axis would cost the company $560 million.

And it criticised the decision to up the break-up fee — payable if either PartnerRe or Axis walked away from the merger — from $250 million to $280 million.

Mr Elkann told the PartnerRe board: “We hope we can engage in constructive discussions with you in order to bring the Exor binding offer to fruition swiftly, delivering significant benefits to PartnerRe shareholders and more certainty to PartnerRe’s more than 1000 employees who morale has, no doubt, been negatively affected by the expected redundancies contemplated in the existing Axis transaction.”

Earlier, 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.