Investment firm Exor accused Bermuda takeover target PartnerRe of using “scare tactics” to boost votes for a rival bid by Axis Capital.

Yesterday’s move came after PartnerRe told preferred shareholders that the debt taken on by Exor as part of its $6.8 billion bid would be a “considerable risk” to the rating of preferred shares in the firm.

The backing of preferred shareholders — who make up 40 per cent of the PartnerRe shareholder vote — is crucial to both sides in the battle to control the company.

Axis hopes PartnerRe preferred shareholders will favour its deal because they argue that Exor would borrow too much money to purchase PartnerRe, with the debt burden weighing on the value of the shares.

But Exor said that ratings agency Standard & Poor’s had confirmed that its capital structure would have no impact on the ratings of PartnerRe — including the BBB rating of its preferred shares.

Now Exor is to launch a charm offensive aimed at PartnerRe investors and analysts to “highlight the considerable strengths of its offer for both the common and preferred shareholders and correct misleading statements by PartnerRe.

A spokesman for Exor said: “Under the proposed transaction, PartnerRe would be a financially stronger company than a combined Axis/PartnerRe. PartnerRe’s debt level would be unchanged and preferred shares’ current rating, terms, rights, listing and registration requirements would be maintained, along with the same tax treatment and financial reporting.

“In addition, preferred shareholders would benefit from lower leverage compared to the Axis transaction and from Exor’s commitment to a more conservative dividend and capital distribution policy, without bearing any post-merger integration risk.”

The spokesman added: “Exor believes its offer remains superior for all classes of PartnerRe shareholders as well as for employees and clients of PartnerRe.” Exor said Standard & Poor’s had affirmed that Exor is rated as an investment holding company, so its rating and the ratings of the companies it invests in are separate.

The Exor spokesman said: “Exor’s debt is not attributed to its investee companies and the debt of its investee companies is not attributed to Exor.

“Calculations publicised by PartnerRe, which purport to aggregate the debt of Exor and its investee companies are therefore wrong and do not follow Standard & Poor’s rating methodology.”

And it called on PartnerRe shareholders to reject the Axis merger when both PartnerRe and Axis hold shareholder meetings to vote on the merger proposal next month.

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 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 9.9 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.