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Exor ups the ante for PartnerRe to $6.8 bn

13 May 2015

1

Heating up a bidding war to acquire Bermuda-based reinsurer PartnerRe Ltd, leading Italian investment firm Exor SpA has raised its takeover offer for PartnerRe to approximately $6.8 billion, trumping a rival bid from Axis Capital Holding Ltd.

Exor's revised binding offer comes just a day after its agreement to sell its majority-controlled real estate services business Cushman & Wakefield to Chicago-based DTZ for about $2 billion. (See: DTZ to acquire Cushman & Wakefield for $2.04 bn)

Exor has now offered an all-cash offer of $137.50 per share to acquire all the outstanding shares of PartnerRe.

The offer represents a 10-per cent premium to the implied value of $125.17 per share under the revised agreement between PartnerRe and Axis, based on the latter's closing price on 5 May, the day prior to reports of Axis' takeover interest, Exor said in a statement.

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.''

''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,'' he added.

Exor has invested $572 million in PartnerRe's to acquire a 9.3-per cent stake and is its largest shareholder.

PartnerRe is a leading global reinsurer, which essentially buys the risks of 'catastrophe' policies [low-probability, high-cost risks that are generally excluded from standard hazard insurance policies] sold by traditional insurance companies, and also offers capital markets products that include weather and credit protection to financial, industrial and service companies.

The company had assets worth $22.5 billion as at the end of March and reported $6.5 billion in revenues last year.

In a separate release, PartnerRe confirmed that it had received Exor's revised offer and will review it in order to recommend it to its shareholders.

Last week, PartnerRe rejected Exor's unsolicited takeover attempt offering $130 a share, on the grounds that it ''significantly undervalued'' the company and there was no prospect of the offer leading to a superior proposal.

Further, PartnerRe and Axis Capital, also a Bermuda-based reinsurer, reaffirmed their merger plans and announced that PartnerRe shareholders will receive a one-time special dividend of $11.50 per share upon closing of the deal.

In January, through a ''merger of equals'' the companies agreed to create the world's fifth-largest reinsurer with a combined market capitalisation of over $11 billion.

Exor blamed PartnerRe for conducting a ''flawed process to date'' and mischaracterising the nature of its discussions with Exor, and attempting to preclude competition to acquire the company.

Exor also provided a signed merger agreement, which can be executed by PartnerRe immediately upon termination of the Axis deal.

Exor expects to net $1.28 billion from its stake sale in Cushman & Wakefield, which it intends to use for part financing the acquisition.

Turin-based Exor is one of Europe's leading investment companies and is controlled by Agnelli family, the descendants of the founder of Fiat.

Apart from its interest in Fiat Chrysler Automobiles (FCA), the firm has investments in capital goods giant CNH Industrial and real estate service firm Cushman & Wakefield. The company has a market capitalisation of about $12 billion.

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