PartnerRe, Axis Capital postpone shareholders’ vote on merger proposal

PartnerRe Ltd., whose board of directors is recommending the insurer merge with Axis Capital Holdings Ltd., said Friday a shareholders’ vote is being postponed to Aug. 7 from July 24.

Both PartnerRe and Axis Capital write reinsurance and commercial primary insurance worldwide, both have Toronto branch offices and both are based in Pembroke, Bermuda. Both are traded on the New York Stock Exchange and a merger would require shareholder approval. Put together, their non-life reinsurance premiums in 2013 were about the same as SCOR SE.

Originally, both PartnerRe and Axis Capital scheduled shareholder meetings July 24 in Bermuda, in order to vote on whether to merge.

Within three months of Axis Capital and PartnerRe announcing their merger proposal, EXOR S.p.A. announced in April its own offer, valued at more than US$6 billion, to acquire all shares of PartnerRe.

EXOR’s offer was originally “envisaged to be friendly” but EXOR is now urging PartnerRe shareholders to vote against merging with Axis Capital, contending that EXOR’s offer for PartnerRe is superior. EXOR announced June 3 it filed a “definitive proxy statement” with the U.S. Securities and Exchange Commission States “in opposition” to PartnerRe’s proposed merger with Axis.

Turin, Italy-based EXOR is an investment firm controlled by the Agnelli family. Its holdings include a significant minority of the shares of Fiat-Chrysler Automobile, as well as a controlling interest in power train manufacturer CNH Industrial N.V., whose products include Case and New Holland heavy equipment.

EXOR originally indicated it was willing to pay $130 per share for PartnerRe and later increased that to $137.50. Then on July 7, EXOR suggested it would “effectively” increase its offer to $143.89 per share if Axis Capital and PartnerRe shareholders vote against merging their firms.

So on July 10, PartnerRe and Axis Capital stating they are “jointly exploring enhancements” to the terms of their proposal.

EXOR had said July 7 that PartnerrRe and Axis “agreed to an aggressive termination and expense reimbursement fee of $315 million” or $6.39 per PartnerRe share.

“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,” EXOR added July 7.

When PartnerRe and Axis originally announced, Jan. 25, that their boards unanimously approved the merger proposal, Axis stated such a merger would create a global top 5 reinsurer.

EXOR said earlier if it were to acquire PartnerRe, that PartnerRe would have an “opportunity” to grow “as a standalone, leading, pure-play reinsurer, without the pressures of being a public company.”

PartnerRe contends that a merger with Axis Capital “makes strategic sense in an evolving industry environment characterized by continued consolidation and new forms of reinsurance and insurance capital which creates opportunities to better withstand cyclical volatility.”

 PartnerRe and Axis Capital had $4.59 billion and $2.138 billion gross written premiums, respectively, in non-life reinsurance, in 2013, according to A.M. Best. PartnerRe and Axis Capital were ranked 10th and 15th that year respectively. SCOR reported $6.675 billion in non-life reinsurance, ranking fifth behind Munich Re, Swiss Re, Hannover Re and the Lloyd’s market, A.M. Best reported earlier.