Axis & PartnerRe challenge Exor on tax issues

Bermuda-based Axis and PartnerRe have reiterated their commitment to merge while continuing to challenge Exor on tax issues.

Recently, the Italian investment company sweetened its acquisition terms, offering a special pre-closing dividend of $3 per share, bringing the total all-cash consideration to $140.50 per share.

PartnerRe confirmed it would seek to engage in negotiations with Exor and offer the opportunity to engage in due diligence.

But now, the two Bermuda-based companies have criticised Exor’s proposal on the basis it has “the potential to subject preferred shareholders (and possibly common shareholders) to an onerous annual reporting and penalty regime applicable to prohibited tax shelter transactions under US income tax laws”.

The companies are currently seeking a private letter ruling from the IRS that a change in terms would not create a “listed transaction”.

Jean-Paul Montupet, PartnerRe chairman, said: “Throughout 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 the proposal put forth by Exor. We must do what is in the best interest of our shareholders and not expose them to risks that may have serious tax and reporting consequences.”

Albert Benchimol, Axis chief executive officer, added: “The strategic and financial benefits of the merger agreement between Axis and PartnerRe continue to represent the most compelling path forward for both companies.

“We are confident that we will be able to provide superior value both to our shareholders and to our clients and distribution partners through the merger, and we are committed to doing so in a manner consistent with our fiduciary responsibilities. I look forward to continuing that process with our colleagues at PartnerRe.”