Exor, the Italian investment company that made a rival bid for Bermuda-based PartnerRe, has enhanced the terms of its offer.
At an investor meeting in New York for PartnerRe shareholders, John Elkann, chairman and chief executive officer (CEO) of Exor, explained that Exor had enhanced its offer on the back of a series of “constructive conversations”.
He explained that Exor would include a “go shop” provision which would allow PartnerRe to solicit bids from third parties after signing with the Italian investment company.
“Exor will permit PartnerRe to actively solicit bids, share due diligence materials and negotiate with third parties until August 31, 2015, so that shareholders have assurance that the Exor binding offer remains the superior alternative for the company,” said the Italian investment company.
During the period, the termination fee will be reduced to $135 million, 2 percent of the deal value.
“There’s been a lot of debate on termination fees. There’s a huge level of frustration from the shareholders of PartnerRe on the inadequacy of the process that has been held by the board of PartnerRe and the protective nature by having an out of the market break-up fee,” said Elkann.
If PartnerRe shareholders vote down the merger with Axis Capital, the reinsurer would not be obligated to pay a termination fee of $315 million (worth $6.39 per share to shareholders). Exor added that if this happens, it will pass the value on to PartnerRe shareholders in full, effectively increasing the value of its binding offer to $143.89 per share.
Exor said that there would be a 100 basis points (bps) increase in the dividend rate, “a powerful signal of Exor’s commitment to PartnerRe preferred shareholders”. PartnerRe’s preferred shareholders have 40 percent of the vote.
Elkann also provided PartnerRe with a legally binding personal commitment to provide the information necessary to obtain regulatory approvals.
He said: “It is odd that that was put into discussions, but this is something that we feel very comfortable about doing because we’re committed to acquiring PartnerRe.”
“This action should put to rest the unfounded concern that all necessary regulatory filings will not be made,” said Exor.
Exor, PartnerRe, Axis, Mergers & Acquisitions, North America, Europe, Bermuda, John Elkann