AXIS: PartnerRe deal superior “immediately & in future” to EXOR deal, halts integration work

AXIS Capital, the insurance and reinsurance company seeking to merge with Bermudian reinsurer PartnerRe in the face of the bid from Italian investment firm EXOR, says the proposed merger is superior “immediately and in the future.” However AXIS has suspended all merger integration work.

After EXOR upped its offer with an additional $3 per share special dividend yesterday, both AXIS and PartnerRe have now stated they remain in favour of combining their firms, rather than seeing EXOR step into reinsurance with PartnerRe.

AXIS said; “The value of our merger agreement with PartnerRe is superior to the EXOR offer both immediately and in the future.  We provide continuity of interest for investors to participate in the future upside resulting from the substantial strategic and financial benefits of the combined company, the exchange of PartnerRe common stock for combined company common stock in the amalgamation is tax free to PartnerRe shareholders, we offer deal closing certainty ahead of the upcoming renewal season, and the combined company will have a superior credit profile.”

In a letter to employees AXIS Capital CEO Albert Benchimol said that work on the merger had stopped, while PartnerRe negotiates with EXOR it’s assumed, but that the shareholder vote date remained set in stone.

Earlier today the Board of PartnerRe acknowledged for the first time that the deal with EXOR could be a superior offer, in transaction terms. But despite that acknowledgement, PartnerRe’s Board said that, while it would allow EXOR to negotiate and enter into due dilligence, it remained in favour of the merger with AXIS Capital.

PartnerRe’s Board of Directors said earlier that it “continues to believe that the transformative amalgamation with AXIS Capital is superior in value, terms and certainty of closing to the current EXOR proposal.”

Benchimol wrote to AXIS shareholders; “As a result of this latest news, we have decided to suspend all integration related work and activities. We will provide more updates when we have information that we can share. In the meantime, the shareholder vote with respect to the merger of PartnerRe and AXIS Capital remains set for August 7.”

So here we are, with an EXOR offer that the target admits may be superior, but both sides in the ongoing merger continue to believe is not the best route for either of the reinsurance firm’s.

And with integration work now on hold, it provides a real opportunity for EXOR to negotiate, but also demonstrates that the confidence in the merger getting completed has perhaps waned at AXIS and PartnerRe, with them unwilling to waste anymore time.

This far down the road to step away from the merger may not be in the best interests of AXIS, perhaps leaving it vulnerable to other offers and making it a target. Meanwhile PartnerRe’s Board is sticking to its guns and continuing to recommend the combination, over remaining a standalone reinsurance entity.

The future for the firm’s remains in the hands of their shareholders though, with voting set for early August. Analysts said today that they would recommend EXOR let’s the vote go ahead, suggesting they feel that shareholders are likely to have been swayed by its enhanced bid.

The statements today from PartnerRe and AXIS perhaps suggest that neither party is willing to further enhance their own deal, feeling that it offers enough value over the longer term. If investors have been swayed by EXOR’s increased offer, that could mean the next two weeks are a mere formality.

For the full story see our previous articles, most recent first:

– PartnerRe Board says EXOR’s offer likely superior, but still prefers AXIS.

– EXOR adds another $3 per common share to PartnerRe offer

– Enhanced PartnerRe – AXIS terms weaken merger rationale: Analyst.

– PartnerRe and AXIS reveal improved merger terms.

– EXOR says PartnerRe & AXIS acknowledge transaction is inferior.

– PartnerRe and AXIS Capital evaluate improving merger deal.

– As EXOR pursues PartnerRe, AXIS could attract buyer: Macquarie.

– Activist Sandell says PartnerRe board misinforming shareholders.

– AXIS needs to match, or beat, EXOR’s improved PartnerRe offer.

– EXOR enhances deal terms for PartnerRe shareholders.

– PartnerRe unimpressed with EXOR’s expanded completion guarantee.

– EXOR sweetens PartnerRe offer with completion guarantee.

– EXOR says receiving positive response from PartnerRe shareholders, plus updates from both sides.

– PartnerRe cites inadequate price, unacceptable risk of EXOR offer.

– Confusion over whether Arch is bidding for AXIS, or not.

– KBW analysts still give AXIS the edge to win PartnerRe deal.

– Arch said to be considering AXIS Capital bid: Reports.

– Analysts feel EXOR has improved chance of buying PartnerRe.

– EXOR capital structure has no bearing on PartnerRe rating: S&P.

– EXOR accuses PartnerRe board of “engineering” AXIS transaction.

– PartnerRe Board urges Preferred Shareholders to vote for AXIS merger.

– Bermuda court rules against Exor’s shareholder detail request.

– PartnerRe shareholders should vote to go with AXIS: KBW analysts.

– PartnerRe says Exor’s lawsuit claims “without merit”.

– Exor sues to gain access to PartnerRe shareholder details.

– PartnerRe-AXIS : $60m fees from third-party reinsurance capital by 2017.

– EXOR welcomes PartnerRe shareholder vote, Sandell questions Board.

– PartnerRe rejects EXOR again, to proceed with vote on AXIS merger.

– EXOR says will engage with PartnerRe board, but not on price.

– AXIS prepared to go it alone if PartnerRe deal breaks up.

– PartnerRe board wants improved EXOR bid, or it’s back to AXIS.

– AXIS unlikely to sweeten PartnerRe offer to match EXOR: Reuters.

– Shareholders hold key to PartnerRe’s future, EXOR bid preferred.

– EXOR increases offer for PartnerRe, becomes largest shareholder.

– Exor to consider increasing bid for PartnerRe, reports.

– AXIS, PartnerRe committed on merger. EXOR commits to its offer.

– Major shareholder prefers EXOR’s bid for PartnerRe over AXIS’.

– EXOR bids $6.4B for PartnerRe, to get into reinsurance.