Axis hikes special dividend amid sweetened PartnerRe offer


Bermuda-based Axis Capital has increased its special cash dividend, amid a sweetened offer for reinsurer PartnerRe.

The special cash dividend payable to PartnerRe common shareholders has been increased to $17.50, compared with $11.50 when it was first offered in May. 

Recently, Axis and PartnerRe said they would delay shareholder meetings by two weeks after revealing they were considering amending the terms of their merger agreement. The companies have pushed back the shareholder vote by two weeks to August 7, 2015. 

In addition, the companies have agreed to match the terms contemplated by Exor’s proposed exchange offer for PartnerRe preferred shares.  

“However, after consultations with their advisors, PartnerRe and Axis believe that there is a material risk that Exor’s proposed exchange offer for PartnerRe preferred shares could be viewed as a ‘listed transaction’ under applicable IRS rules, which would 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,” said PartnerRe. 

If successful in obtaining a ruling from the IRS that an exchange offer would not result in this reporting requirement, PartnerRe preferred shareholders would receive newly issued preferred shares reflecting a 100 basis point increase in the current dividend rate.

Additionally, PartnerRe and Axis have agreed that each party’s obligation to close the amalgamation is no longer conditioned on the absence of a three notch rating downgrade from AM Best.  

“By removing this rating downgrade closing condition, PartnerRe and Axis have provided even more certainty to the successful consummation of the transaction,” said the companies.

Jean-Paul Montupet, PartnerRe chairman, said: “We are very pleased to agree to enhanced terms with AXIS Capital so that shareholders can realise the value of the combination. This amalgamation will immediately enhance our strategic positioning and financial strength and we will have tremendous resources to build upon our proven track record of stability and success.  

“As we approach the August 7 meeting date for shareholders to approve the amalgamation, we are confident that they will recognise the unique potential of this transformative combination.  In addition to the cash special dividend, shareholders will benefit from owning a significant interest in a world-class specialty insurance and reinsurance franchise.”

Albert Benchimol, Axis chief executive officer, added: “The strategic and financial benefits of the merger agreement between AXIS Capital and PartnerRe are compelling, and we are confident that it will deliver superior value both to our shareholders and to our clients and distribution partners.  

“The combination represents a unique opportunity to create a financial powerhouse in the industry with a strong franchise, robust earnings power, and double-digit ROE that is well-positioned to achieve superior and stable value creation across both secular and cyclical market changes.  

“The combined company will have the scale, the product reach and the service capabilities to add substantial value and deepen our relationships with clients and distribution partners. At the end of the day, the merger creates opportunities that neither company could really achieve on its own in the near-term – including expense synergies in excess of $200 million, significant capital efficiencies, and incremental growth opportunities.”

Axis Capital, Bermuda, PartnerRe, Mergers & Acquisitions, Europe, Exor

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