By agreeing to evaluate the terms of the amalgamation deal and pushing the shareholder votes further back, reinsurance firms PartnerRe and AXIS Capital are acknowledging that their transaction is inferior, according to EXOR.
The Italian investment holding company controlled by the Agnelli family responded late Friday to the news that PartnerRe and AXIS would look into how they can improve the terms of their merger deal for the shareholders benefit.
That came on the heels of EXOR itself having improved its offer to buy reinsurance firm PartnerRe as it seeks to get shareholders on side to vote against the AXIS deal which would leave the way open for the firm to buy the reinsurer.
EXOR said late Friday that; “PartnerRe has acknowledged the superiority of EXOR’s Binding Offer by questioning the terms of its own amalgamation agreement with AXIS Capital.
“By postponing its own shareholder meeting, PartnerRe continues its attempts to rescue an inferior transaction that is the result of a flawed process.”
EXOR said that it remains committed to “bringing its offer to fruition for the benefit of all PartnerRe shareholders.”
In the face of the enhanced offer from EXOR there is little that PartnerRe and AXIS could do other than to seek to enhance their own deal terms.
Where any enhancements come from could be telling, as some investors will not appreciate further disbursements of capital in the form of dividends or one-offs, preferring to see the firms ready to invest for the future. That leaves few other options for sweetening the terms it would seem.
However, with the latest filings showing that hedge funds and other institutions now own around 86% of the PartnerRe stock, an attractive additional disbursement combined with a conversion into the amalgamated company shares could get some of these investors onside.
With the shareholder votes now pushed back to the 7th August the reinsurance firms have some time to make their offer more compelling. If they sweeten the deal significantly it will be interesting to see whether EXOR is prepared to go any further.
There must be limits to all parties appetites to continue sweetening the deal and it will be interesting to see which side reaches the limits first.
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