Canadian Underwriter

PartnerRe shareholders approve EXOR acquisition, completing expected in Q1 2016

November 19, 2015   by Canadian Underwriter

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Bermuda reinsurer and commercial insurer PartnerRe Ltd. announced Thursday its shareholders voted in favour of a takeover by EXOR S.p.A., the Turin, Italy-based investment firm that effectively controls Fiat-Chrysler Automobile.

The transaction had been valued earlier at US$6.9 billion

The transaction had been valued earlier at $6.9 billion. All figures are in United States dollars.

“All required antitrust approvals,” of EXOR’s acquisition of PartnerRe, “have been obtained,” stated PartnerRe, which has a Toronto branch office. “The insurance regulatory approvals remain on track for the transaction to close during the first quarter of 2016.”

EXOR – which had invested in PartnerRe when it was founded in 1993 – announced April 14, 2015 an offer to acquire PartnerRe. But at that time, PartnerRe’s board had been recommending the firm merge with Axis Capital Holdings Ltd. Both Axis and PartnerRe are based in Pembroke, Bermuda. Both write reinsurance and commercial primary insurance worldwide. PartnerRe’s “principal” offices outside Bermuda are in Dublin, Greenwich, Conn., Paris and Zurich.

Related: PartnerRe shareholders to vote on proposed takeover by EXOR

Had the merger agreement with Axis – originally announced Jan. 25 – been approved, the combined firm would have been a global top 5 reinsurer, Axis stated at the time. At the time Axis and PartnerRe announced their merger agreement, Costas Miranthis stepped down as PartnerRe’s chief executive officer of PartnerRe and was replaced on an interim basis by David Zwiener, former chairman of the audit committee of the firm’s board of directors.

PartnerRe’s commercial primary coverages include auto, agriculture, aviation/space, credit/surety, engineering, energy and marine, among others.

PartnerRe announced Aug. 2 it had reached a definitive agreement to be bought by EXOR, with an offer made in July being described by PartnerRe as a “significant improvement in the price and terms” compared to EXOR’s original offer in April.

“Importantly, EXOR is committed to ensuring that the unique culture, brand and business that our dedicated employees have successfully built over the past 20 years remain intact,” PartnerRe chairman Jean-Paul Montupet stated in a release this past August.

Before EXOR increased its offer, PartnerRe had stated a merger with Axis Capital would make “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 agrees to be bought by EXOR, terminates merger agreement with Axis Capital

In addition to about 44% of voting rights of Fiat-Chrysler Automobile, EXOR also owns nearly 40% of voting rights of CNH Industrial N.V., whose products include power trains and commercial vehicles, as well as farming and construction equipment under the Case and New Holland brands. EXOR is controlled by the Agnelli family. Its other other holdings include The Economist magazine and the Juventus Football Club.

Other recent mergers and acquisitions in the sector include

-Endurance Specialty Holdings Ltd.’s agreement, announced March 31, to acquire Montpelier Re Holdings Ltd.

-The acquisition of Platinum Underwriters Holdings Ltd. by RenaissanceRe Holdings Ltd., completed March;

-ACE Ltd.’s $28.3-billion acquisition of The Chubb Corp., which has been approved by shareholders of both firms, still requires regulatory approval, would have the combined firm remain based in Switzerland and led by ACE chairman and CEO Evan Greenberg but under the Chubb name;

-XL Group Plc’s acquisition of Catlin Group Ltd., which completed May 1; and

Tokio Marine Holdings Inc.’s $7.5 billion agreement, announced in June, to acquire Houston-based HCC Insurance Holdings Inc., the parent firm of Houston Casualty Company and Lloyd’s Syndicate 4141.

Had the Jan. 25 merger agreement been Axis Capital and PartnerRe been approved, it would have given Axis Capital and PartnerRe shares in a new firm, such that PartnerRe shareholders would own 51.6% of the merged firm and Axis Capital shareholders would own the other 48.4%.

On May 4, about three weeks after EXOR’s announced its initial offer, PartnerRe increased its offer to add a one-time dividend of $11.50 per PartnerRe share.

EXOR originally offered April 14 $130 per share for PartnerRe, in a proposal submitted to PartnerRe’s board that EXOR said was “envisaged to be friendly.” EXOR later increased its offer to $137.50 a share.

EXOR had suggested in the spring that if PartnerRe’s board would not declare EXOR’s offer to be superior to the Axis merger proposal, then EXOR would ask PartnerRe’s board to announce a date for a meeting to allow PartnerRe shareholders “to decide what is in their best interest.”

EXOR is now buying PartnerRe for $137.50, plus a special dividend of $3, per share. EXOR’s agreement included a “go-shop” period, allowing PartnerRe’s board to “actively solicit and evaluate any competing offers” and to enter into negotiations with potential buyers if proposals were received before Sept. 14.

“An extensive outreach was conducted by Credit Suisse and Lazard, acting as PartnerRe’s co-financial advisors,” PartnerRe stated after the end of the go-shop period. “None of the third parties contacted during this process provided a proposal or offer regarding an alternative acquisition proposal.”