EXOR Announce Another Offer For PartnerRe
EXOR, one of Europe’s leading listed investment companies, today [May 12] announced another offer to buy Bermuda-based PartnerRe Ltd, with the offer to acquire all of the outstanding common shares of PartnerRe for $137.50 per share in cash, valuing PartnerRe at $6.8 billion.
Earlier this month, PartnerRe Ltd. announced that it rejected the first unsolicited proposal by EXOR to acquire PartnerRe, saying: “The Company further reaffirmed its commitment to the planned merger with AXIS Capital Holdings Limited and announced enhanced merger terms that allow PartnerRe to pay a one-time special dividend of $11.50 per common share to PartnerRe common shareholders prior to the closing of the amalgamation agreement between PartnerRe and AXIS Capital.
In their announcement today, EXOR said, “The binding offer is not subject to due diligence and is not conditioned on financing. EXOR now calls on the PartnerRe Board to recommend EXOR’s clearly superior all-cash offer.
“The binding offer of $137.50 per share represents a 10% premium to the implied value of $125.17 per PartnerRe share under the revised Amalgamation Agreement between PartnerRe and AXIS Capital Holdings Limited, based on the AXIS closing price on May 5, 2015, the last day prior to published reports of takeover interest in AXIS, if its transaction with PartnerRe fails.
“EXOR’s commitment to its offer is underscored by its decision to invest $572 million in PartnerRe, representing 9.32% of the total outstanding common shares. EXOR is now PartnerRe’s largest shareholder.
“EXOR continues to maintain that the Board of PartnerRe has conducted a flawed process to date and has mischaracterized 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.
“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 unanimously approved the binding offer, which includes a signed merger agreement that can be executed by PartnerRe immediately upon termination of the AXIS agreement. The binding offer will expire on the earlier of [i] two days after the AXIS transaction is terminated, or [ii] July 11, 2015, which is two days after PartnerRe’s expected special general meeting date.
“EXOR is filing today preliminary proxy materials with the U.S. Securities and Exchange Commission [“SEC”] in connection with PartnerRe’s upcoming special general meeting of its shareholders. If the PartnerRe Board continues to ignore the best interests of the Company by working to favor 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.
“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,” said John Elkann, Chairman and CEO of EXOR.
“EXOR also today launched a website whereby PartnerRe investors and other interested parties can review information about its offer at www.exor-partnerre.com.”
This is going to be a very interesting tug of war. One the one hand the PartnerRe board clearly believe a merger with Axis is better for the company in the long-run: it makes the combined company a big player in the reinsurance industry. If you left PartnerRe as is, it would be a very small fish in a very big pond and therefore uncompetitive.
But the shareholders must be salivating over getting $137.50 a share – very tempting and will make a few people very rich and give institutional investors a very good return.
Let’s get the popcorn out ……
What is better for the shareholders ?clearly the Exor offer…but boards hate to admit they are wrong and usually find ways to explain their failure…..