Swiss Re Insurance-Linked Fund Management

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PartnerRe unimpressed with EXOR’s expanded completion guarantee


Following on the heels of EXOR’s announcement yesterday that it was “expanding its legally binding guarantee for the transaction”, reinsurance firm PartnerRe responded saying that the modifications to its offer fail to address the risks.

PartnerRe said that, despite the expanded guarantee of completing the acquisition,  it “continues to believe that EXOR’s offer poses significant and unacceptable risks, while also substantially undervaluing the Company.”

PartnerRe says that the modification of the offer to try to make the guarantee of completion more legally binding, shows that EXOR acknowledges that there are risks and weakness in the all-cash offer for PartnerRe shares.

As a result the reinsurance firm continues to press its shareholders to vote in favour of the combination deal with insurance and reinsurance specialist AXIS Capital.

PartnerRe goes on to explain the following about the modified EXOR offer terms:

  • EXOR Acknowledges Risks and Weaknesses in its Offer. The only material modification by EXOR to its proposed contract is that EXOR S.p.A. will now assume responsibility should one of its shell subsidiaries breach the contract. PartnerRe had identified this as a significant risk from the onset. EXOR’s effort to address this risk – after four intervening revisions to the merger agreement terms since April 2015 – is confirmation that EXOR has clearly been attempting to mislead PartnerRe shareholders while limiting its own liability.
  • Regulatory “Walkaway” Risk Remains. Neither EXOR nor the Agnelli Family is obligated under the contract to file and obtain regulatory approval in any jurisdiction. Should EXOR and its controlling family members elect to not appropriately pursue regulatory approvals, EXOR’s shell subsidiaries have NO legal ability to force EXOR and its controlling family members to file for regulatory approval – hence the parent “guarantee” is insufficient. Importantly, PartnerRe believes that regulators will initiate detailed reviews of EXOR’s plans and strategies for PartnerRe in light of EXOR’s portfolio of capital intensive, low-margin companies and that EXOR would be highly levered following an acquisition of PartnerRe.
  • EXOR’s Lenders have “Veto” Rights over Regulatory Process. EXOR’s lenders continue to have approval rights over concessions made to regulators in connection with securing regulatory approvals. This means that EXOR does not have unrestricted ability to commit to do everything necessary to obtain regulatory approvals.
  • Revised Contract Does Not Protect PartnerRe Shareholders. PartnerRe notes that EXOR has not introduced a customary reverse termination fee, which is necessary for a financial buyer that is unknown to the relevant regulators. PartnerRe does not believe that EXOR’s current share ownership and verbal commitments are sufficient to ensure a path to completion. PartnerRe’s Board also believes that this normal protection has taken on even greater importance given recent global financial developments.

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

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.

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