Canadian Underwriter

PartnerRe improves terms of proposed merger with Axis Capital

July 17, 2015   by Canadian Underwriter

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In an effort to encourage shareholders to support a merger with Axis Capital Holdings Ltd., PartnerRe Ltd. announced Thursday it is offering to increase, by 52%, a special dividend that PartnerRe shareholders would get in the event of such a merger.

EXOR S.p.A. is trying to encourage PartnerRe shareholders to vote against a merger with insurer Axis Capital Holdings Both of the Pembroke, Bermuda-based companies write reinsurance and commercial primary insurance worldwide. Both have Toronto offices. PartnerRe and Axis Capital announced Jan. 25 that their board members unanimously approved a merger agreement, which is subject to regulatory and shareholder approval. A merger would create a global top 5 reinsurer, Axis Capital stated at the time.

But EXOR S.p.A. also wants to acquire PartnerRe, which is traded on the New York Stock Exchange. PartnerRe stock opened at $119.14 April 14 when EXOR announced an offer to acquire PartnerRe at $130 per share. It is currently trading at more than $134. All figures are in United States dollars.

Both PartnerRe and Axis Capital shareholders are scheduled to vote Aug. 7 on whether to merge. EXOR is urging PartnerRe shareholders to vote against the merger.

Related: PartnerRe, Axis Capital postpone shareholders’ vote on merger proposal

Turin, Italy-based EXOR – an investment firm controlled by the Agnelli family – later increased its offer to buy PartnerRe at $137.50 per share. Then on July 7, EXOR stated an enhanced offer would “effectively” give PartnerRe shareholders $143.89 a share if both Axis Capital and PartnerRe shareholders were to vote against a merger.

PartnerRe reinsures property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy and marine. In commercial insurance, its coverages include aviation, energy, engineering and marine.

Axis Capital reinsures property, professional lines, engineering, surety, auto and agriculture. Its primary coverages include property, marine, aviation and liability.

If the companies were to merge, PartnerRe shareholders would own 51.6% of the merged firm and Axis Capital shareholders would own the other 48.4%. PartnerRe shareholders would get 2.18 shares of the combined company for each share of PartnerRe common shares they own, and Axis Capital shareholders would get one share of the post-merger firm per Axis Capital common share.

Related: EXOR files securities documents in effort to acquire reinsurer PartnerRe

PartnerRe announced May 4 it would improve the merger terms, stating that PartnerRe shareholders would also get special dividend of $11.50 per share if it were to merge with Axis Capital. Then on July 16, PartnerRe said that dividend would now be $17.50 a share.

When PartnerRe announced its proposed merger last January with Axis, Costas Miranthis stepped down as PartnerRe chief executive officer in January. The interim CEO is now David Zwiener.

Partner Re stated earlier 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.”

Related: PartnerRe board of directors rejects takeover offer from EXOR

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

PartnerRe would “remain an independent company, conservatively operated by its current, outstanding management team,” if owned by EXOR, according to a June 3 EXOR press release.

Existing EXOR holdings include a significant minority of both Fiat-Chrysler Automobile and CNH Industrial N.V., whose wares include power trains as well as the Case and New Holland construction and farm equipment.