PartnerRe’s board of directors has urged preferred shareholders to vote for a merger with Axis.
“The amalgamation with Axis Capital results in an even stronger company with higher, more diversified earnings, lower volatility and an enhanced business profile to support the security and value of the PartnerRe preferred securities,” said PartnerRe.
“In contrast, the Exor proposal diminishes the value of the preferred shares compared to both standalone PartnerRe and pro forma PartnerRe/Axis.”
PartnerRe has also issued a presentation to its shareholders detailing why the merger is the best way forward. The presentation outlines the benefits of merging with PartnerRe and the inherent risks of the proposed Exor bid.
“Significant additional leverage that would be incurred by Exor to fund the acquisition of PartnerRe, combined with Exor’s lower credit rating, results in considerable risk that the credit rating of the preferred shares is downgraded, to BBB-, only one notch above ‘junk’,” said the reinsurer.
It added that PartnerRe’s common equity would no longer be publicly traded. The reinsurer said this would limit its access to third party capital, research coverage of the company and would likely reduce trading liquidity for preferred shares.
PartnerRe said: “The valuable right held by preferred shareholders to vote on the outcome of future mergers and amalgamations would be effectively nullified, providing no ability for preferred shareholders to have a say in the future direction of PartnerRe because Exor will control 100 percent of the common votes and therefore be able to control any voting outcome.”
PartnerRe, Axis, Exor, Mergers & Acquisitions, Bermuda, Europe