EXOR To Present “Further Enhancements”
EXOR is today [July 7] holding an Investor Meeting in New York for all PartnerRe shareholders, where John Elkann, Chairman and CEO of EXOR, will present what the company said were “further enhancements” to EXOR’s Binding Offer “making an already superior offer to PartnerRe Common and Preferred Shareholders even more attractive.”
PartnerRe has already urged shareholders attending EXOR’s presentation to “demand substantive and factual answers to critical questions,” saying that to “date EXOR has either avoided answering important questions altogether or has provided misleading or incomplete responses to shareholders’ concerns.”
The statement from EXOR is below:
EXOR’s offer for PartnerRe is superior by all significant measures; the $137.50 per share all-cash offer is binding, fully financed, and provides a clear and highly assured path to closing. EXOR’s Binding Offer is fully backed by the balance sheet of its listed parent, a public company with a Net Asset Value of approximately $15 billion
And today, after constructive conversations with PartnerRe Common and Preferred Shareholders, EXOR is making the following enhancements to the terms of its Binding Offer and has delivered to PartnerRe a revised signed Merger Agreement reflecting those enhancements.
The enhancements for Common Shareholders are:
- A “Go Shop” Provision Allowing PartnerRe to Solicit Bids from Third Parties After Signing with EXOR – 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. During the “Go Shop” period, EXOR will reduce the termination fee to $135 million [2.0% of deal value]. These changes will provide PartnerRe shareholders the certainty of a superior transaction at a price of $137.50 per share should other buyers not emerge or should PartnerRe face catastrophe losses or other book value losses.
- If PartnerRe is Not Obligated to Pay the Termination Fee to AXIS, EXOR Commits to Pass the Full Value [$6.39 Per Share] to PartnerRe Shareholders – As part of the AXIS transaction, PartnerRe and AXIS agreed to an aggressive termination and expense reimbursement fee of $315 million [over 4.5% of the deal value] to ward off potential bidders. This is worth $6.39 per share to PartnerRe shareholders. In the event both PartnerRe and AXIS shareholders vote down the PartnerRe/AXIS transaction, and hence this fee is not payable by PartnerRe, EXOR commits to pass this value on to PartnerRe shareholders in full, effectively increasing the value of its Binding Offer to $143.89 per share.
- Personal Commitment From John Elkann Underscores Regulatory Certainty in EXOR’s Merger Agreement – To underscore EXOR’s commitment to obtaining regulatory approval, today John Elkann provided PartnerRe with a legally binding personal commitment to provide the information necessary to obtain such approvals. This action should put to rest the unfounded concern that all necessary regulatory filings will not be made.
EXOR Has Legally Committed to Launch an Exchange Offer for PartnerRe Preferred Shares Promptly Following Closing of the EXOR Merger, with Improved Economic and Other Features.
The enhancements announced today by EXOR legally commit PartnerRe to offer to exchange on a tax-free basis, each series of PartnerRe preferred shares – D, E and F – for a new series of preferred shares having identical terms as existing preferred, other than certain significantly improved terms described below, should EXOR be successful in acquiring PartnerRe.
The enhancements for PartnerRe Preferred Shareholders upon exchange are:
- A 100bps increase in the dividend rate – This is a powerful signal of EXOR’s commitment to PartnerRe Preferred Shareholders.
- Call Protection Until 2021 – All three series of PartnerRe Preferred Shares are currently callable in the next three years with Series D callable now, Series E next year and Series F in 2018. Under the enhanced terms, EXOR commits not to call the preferred shares before January 1, 2021, providing Preferred Shareholders with certainty of income for a significantly extended period.
- 5 Years of Capital Distribution Limits – Consistent with its conservative management approach, EXOR will cause PartnerRe to limit distributions1 to common shares to an amount not greater than 67% of earnings – one of the lowest in the industry – until December 31, 2020 [the expected fifth anniversary of closing of the EXOR transaction]. Under EXOR’s ownership PartnerRe will be a stronger and better capitalized company. EXOR’s commitment to conservative capital management contrasts with PartnerRe’s approach which last year saw 90% of earnings distributed to Common Shareholders, a figure that would rise under the AXIS/PartnerRe transaction to more than 125% of earnings in the 2015-2017 period.
In summary, under the existing EXOR Binding Offer for PartnerRe, Preferred Shareholders would continue to own a listed security with the same tax treatment, financial reporting standards and expected credit rating. They would also own a company with lower initial leverage when compared to the terms of the AXIS transaction and without exposure to the significant merger integration risks of a combination with AXIS. Under the enhanced EXOR Binding Offer announced today the terms will further provide PartnerRe Preferred Shareholders with higher return securities, non-callable for longer and in a company legally committed for five years to one of the most conservative capital distribution policies in the insurance and reinsurance industry. This is in contrast to the AXIS/PartnerRe transaction which will adopt one of the most aggressive capital distribution policies in the industry.
EXOR is committed to ongoing, transparent communications with Preferred Shareholders. Under EXOR’s ownership PartnerRe will continue to provide quarterly and annual financial reports [in accordance with US GAAP, including statistical supplements], and will continue to hold a quarterly conference call for Preferred Shareholders.
EXOR is soliciting Common and Preferred Shareholders to vote AGAINST the proposed AXIS transaction at the upcoming Special General Meeting of PartnerRe shareholders to be held on July 24, 2015. This will enable PartnerRe to accept EXOR’s superior all-cash $137.50 per share binding offer for the Company.
PartnerRe Preferred and Common Shareholders seeking copies of the proxy statement or with questions about the EXOR offer or voting their shares can contact EXOR’s proxy solicitor, Okapi Partners LLC, at info@okapipartners.com or toll free at [877] 796-5274 [banks and brokerage firms should call +1 [212] 297-0720].
