John Elkann, who is offering $6.8 billion for a company that doesn’t have a permanent chief executive officer, plans to find a leader internally at PartnerRe Ltd. if he wins the bidding for the reinsurer.
“We always like to promote from within,” Elkann, the chairman of Exor SpA, told reporters in New York Tuesday after a meeting with investors. “People who are running this business are a very good team.”
Exor is known for industrial holdings such as a stake in Fiat Chrysler Automobiles NV. Elkann needs to assure investors that his firm is ready to run a reinsurer as Turin, Italy-based Exor seeks to persuade PartnerRe shareholders to vote against a planned merger with Axis Capital Holdings Ltd. at a July 24 meeting.
PartnerRe has been led by an interim CEO after the departure of Costas Miranthis in January, when the merger was announced. Axis CEO Albert Benchimol is the former chief financial officer of PartnerRe and has been designated to lead the combined company. He’s said there will be opportunities to reduce expenses, an idea that has been challenged by Exor.
“The company is a very good company as it is, and it can grow,” Elkann said of PartnerRe. “We have absolutely no calculations in why we should be reducing headcount.” He said that he’s been unable so far to meet with top PartnerRe management because of the reinsurer’s agreement with Axis.
PartnerRe’s former CEO Patrick Thiele said last week that an Exor deal would create more value and that Axis’s cost-cutting plan could pressure sales. Reinsurers provide backup coverage to primary carriers.
Thiele had contacted PartnerRe Chairman Jean-Paul L. Montupet in January to offer assistance during the transition. He then volunteered to help Elkann after the Italian firm made an unsolicited bid.
Wall Street Investors
Axis and PartnerRe, both based in Bermuda, seek to create the world’s fifth-largest property-and-casualty reinsurer through a merger that would diversify risks. The added scale could help the company fend off competition from new rivals, including Wall Street investors who are seeking weather-related bets that are uncorrelated with financial markets.
Exor, the investment firm of the billionaire Agnelli family, released revised offer terms Tuesday to allow the target company to solicit bids and negotiate with other potential buyers if it accepts Elkann’s proposal. Exor also said it would lift the dividend rate on preferred shares by one percentage point and won’t call three series of the securities until 2021.
“These improvements only strengthen the company’s probability of success in getting PartnerRe shareholders to vote against the merger with Axis,” Charles Sebaski, an analyst at BMO Capital Markets, said in a note to investors.