EXOR Still “Committed” To Offer For PartnerRe
EXOR said it “notes the decision by the Board of Directors of PartnerRe Ltd. to abandon its prior agreement and accept a revised but still inferior transaction from AXIS Capital Holdings Limited in preference to EXOR’s own proposal.”
Yesterday PartnerRe, a Bermuda-based re/insurer, reaffirmed its commitment to the planned merger with AXIS and announced what they said were “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.
“The PartnerRe Board held extensive discussions with EXOR, who announced their unsolicited all cash proposal on April 14, 2015,” the company said. “The PartnerRe Board noted that throughout the course of negotiations, EXOR maintained its $130 per share proposal, and indicated that due diligence on PartnerRe would be “confirmatory” only and that there would be no price improvement. Despite numerous attempts by the PartnerRe Board to negotiate on price, EXOR stated that $130 per share was its best and only offer.
“The PartnerRe Board concluded from these negotiations and analysis that the EXOR proposal does not properly or adequately value PartnerRe, as it does not fully recognize the strength of its balance sheet and the value of its franchise..”
In response, EXOR said, “The decision by the PartnerRe Board continues to ignore the superior nature of EXOR’s fully financed, all-cash proposal of $130 per share, which offers a significant premium to PartnerRe’s shareholders. In contrast, AXIS’ revised transaction still undervalues PartnerRe and is clearly not in the best interests of PartnerRe, its shareholders, employees and policyholders.
“EXOR’s proposal is financially superior, with no financing conditions, can be completed swiftly and will retain and build upon PartnerRe’s highly talented management and employees.
“With regard to AXIS’ revised transaction for PartnerRe:
- The revised terms are a clear admission that the original transaction with AXIS, which was the result of a flawed process, undervalued PartnerRe, as is the case with the revised transaction.
- The purported value of the proposed $11.50 extraordinary dividend is misleading. Since PartnerRe shareholders would own approximately 52 percent of a combined PartnerRe/AXIS, the incremental value to the PartnerRe shareholders is less than half of the proposed dividend.
- The proposed extraordinary dividend will reduce PartnerRe’s capital by more than $550 million and significantly weaken PartnerRe’s financial strength at a point when both PartnerRe and AXIS have been placed under review with negative implications by A.M. Best. In contrast, EXOR’s all-cash proposal fully preserves PartnerRe’s financial strength, while delivering full and superior value to PartnerRe shareholders.
- The PartnerRe transaction with AXIS is the product of a flawed process. No consideration was given by PartnerRe to alternatives when it entered into the original agreement with AXIS, and PartnerRe refused to engage fully with EXOR in response to EXOR’s proposal. After EXOR satisfied clarifying questions from PartnerRe, PartnerRe refused to permit EXOR to conduct due diligence and ceased to engage. The result is another inadequate proposal for PartnerRe.
“Notwithstanding the PartnerRe Board’s continued support for a still inferior transaction with AXIS, PartnerRe shareholders will ultimately decide which transaction is superior. EXOR is therefore determined to pursue its transaction on the proposed terms and is fully committed to achieving its rapid completion,” the company added.
