Row brews as Exor makes new bid for PartnerRe

The board of PartnerRe has come under severe criticism from Italian investment company Exor which, in tandem with an improved offer to buy the reinsurer, has accused it of not acting in the best interests of PartnerRe’s shareholders.

The new offer and accompanying warning that Exor may directly solicit PartnerRe’s shareholders if the board again fails to recommend its offer, leaves the reinsurer’s agreement with Axis Capital hanging in the balance.

The entire situation also has echoes of the bitter and very public spat that occurred during Endurance’s failed attempt to takeover Aspen Insurance last year.

Exor’s new bid comes after PartnerRe’s board rejected Exor’s first offer and reaffirmed its intention to complete a deal with Axis Capital, the terms of which were enhanced following the Exor bid to include a one-time special dividend to PartnerRe shareholders.

Exor has now raised its all-cash offer for PartnerRe to $137.5 per share, which Exor said values PartnerRe at $6.8 billion and represents a 10 percent premium to the implied value under the Axis agreement. It had previously offered $130 per PartnerRe share. Exor is also now PartnerRe's largest shareholder with a 9.32 percent stake.

Exor was also highly critical of the PartnerRe board in the way it has handled the rival bids so far. Specifically, it has claimed that the board has ignored the superior value of the Exor bid and is not acting in the best interests of the company.

“Exor continues to maintain that the board of PartnerRe has conducted a flawed process to date and has mischaracterised the nature of its discussions with Exor. In fact, PartnerRe revised the Amalgamation Agreement with AXIS in an attempt to preclude competition to acquire the company by including, among other changes, an excessive break-up fee and increased restrictions on PartnerRe’s ability to consider competing proposals,” Exor said in its latest offer.

“Despite rejecting Exor’s initial proposal, PartnerRe’s board effectively acknowledged the superiority of Exor’s transaction by seeking a revised agreement with AXIS (albeit on terms that continue to be inferior).

“Exor’s $137.50 per share all-cash binding offer widens the gap further and unequivocally provides an opportunity for superior value to shareholders.”

Exor’s board has unanimously approved this new binding offer, which includes a signed merger agreement that can be executed by PartnerRe immediately upon termination of the AXIS agreement.

“If the PartnerRe board continues to ignore the best interests of the company by working to favour its transaction with Axis, this filing enables Exor to solicit PartnerRe shareholders to vote against the demonstrably inferior Axis transaction. PartnerRe shareholders can vote against with confidence because Exor has provided a clear path to completion through its binding offer that can be executed by PartnerRe immediately upon termination of the Axis agreement,” the company wrote.

John Elkann, chairman and CEO of Exor, said: “Exor’s binding offer clearly delivers superior and certain value for PartnerRe shareholders, and provides a more attractive outcome for the company’s employees and clients. We hope the PartnerRe board agrees and does the right thing. In any event, we believe PartnerRe shareholders deserve the opportunity to choose our offer and, in order to do so, we urge them to vote against the inferior Axis transaction.”

PartnerRe declined to comment on this latest development.