Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

EXOR welcomes PartnerRe shareholder vote, Sandell questions Board


Italian holding company EXOR said that it welcomes the chance for PartnerRe shareholders to vote on the reinsurance firms future, while activist investor Sandell Asset Management has questioned PartnerRe’s board’s commitment to a fair process.

PartnerRe’s board said last week that it would proceed with a shareholder vote on whether to proceed with the merger with insurance and reinsurance firm AXIS Capital. That allows the shareholders to effectively decide whether they prefer to combined, becoming a bigger, more diverse re/insurer in the process, or to take the all-cash offer that EXOR has offered.

EXOR said late on Friday that PartnerRe “continues to mischaracterize our proposal,” while also saying that the reinsurance firm “remains unwilling to engage with EXOR according to the terms provided in their agreement with AXIS Capital.”

Despite feeling that its cash offer to buy out the shares of PartnerRe has been spurned to date, EXOR said it welcomed shareholders getting a chance to vote on the future of the company, saying it is “confident that PartnerRe shareholders will vote in their best interest and that EXOR’s $137.50 per share all-cash Binding Offer will ultimately prevail as it provides superior value and certainty.”

EXOR urged the PartnerRe board to arrange the vote as quickly as possible.

Meanwhile, Thomas E. Sandell, CEO of Sandell Asset Management, wrote a letter to the chairman of PartnerRe’s board, saying that the board’s behaviour “raises questions about its commitment to fair process.”

Sandell’s letter says that the board of PartnerRe “did not appear to have been in the best interests of PartnerRe shareholders” while the “continued refusal to designate the EXOR offer as reasonably likely to result in a “Superior Proposal” raises significant questions about the Board’s commitment to a fair process.”

Sandell said that in the investors eyes there is “ample evidence” that the EXOR bid for PartnerRe is likely to result in a superior proposal under the merger agreement.

Sandell explained:

We believe that PartnerRe should immediately and publicly acknowledge this, and follow the process outlined in Section 5.8 of the merger agreement with Axis – a process which was specifically negotiated by PartnerRe. Based on our understanding of the Axis merger agreement, such a determination would not jeopardize the potential merger with Axis. Rather, the Board would be free to negotiate with EXOR before determining, in good faith, whether to change its recommendation, while simultaneously initiating a process that would permit Axis to improve its offer. We fail to understand how the Board’s decision to ignore the merger agreement’s fair and well-defined provisions that specifically contemplate the Company’s current scenario is consistent with the Board’s stated desire to maximize value for all shareholders.

Sandell said that it is ready to exercise its rights to hold the PartnerRe board accountable to shareholders, if it continues to feel that the board had not been acting in the best interest of the reinsurance firm’s shareholders.

Sandell’s stake in PartnerRe is less than 1%, but it and other potentially activist shareholders could hold the key to the future of the firm. The vote on the AXIS merger is a positive step though, as it will at least give the board of PartnerRe a firm direction to proceed in based on the views of the reinsurers shareholders.

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

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.

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