Would-be merger partners Axis Capital and PartnerRe yesterday said their deal was better than a rival bid for PartnerRe by Italian investment giant Exor.

A joint statement by the two Bermuda-based companies said that their $11 billion all-share transaction would be superior if the companies are successful in a bid to get the US tax office to rule that a change in terms would not create a “listed transaction.”

The two firms said that the Exor proposals could leave preferred shareholders and possibly common shareholders open to “an onerous annual reporting and penalty regime applicable to prohibited tax shelter transactions under US income tax laws.”

A statement from both firms added: “The companies believe it is more appropriate and provides greater certainty for shareholders to implement these terms only with an IRS ruling in hand.

“Exor’s proposal for preferred shareholders appears to disregard this fundamental responsibility and is therefore unacceptable to PartnerRe’s board.”

PartnerRe on Tuesday said that the all-cash $6.8 billion plus bid by Exor was likely be the “superior proposal” and that it is prepared to talk to the Italian company, controlled by the billionaire Agnelli family, in an attempt to improve price and terms.

But the firm added that it continued to believe that the Axis merger was “superior in value, terms and certainty of closing.”

PartnerRe chairman Jean-Paul Montupet said yesterday: “Through this process our goal has been to achieve the best value for holders of both our common and preferred shares.

“We are pleased that we have agreed with Axis Capital to provide our preferred shareholders with a superior proposal and less risk than that put forth by Exor.

“We must do what is in the best interests of our shareholders and not expose them to risks that may have serious tax and reporting consequences.”