Axis Capital Holdings Ltd. and PartnerRe Ltd. halted preparations for their planned merger after PartnerRe said it is seeking to negotiate with hostile bidder Exor SpA.
“As a result of this latest news, we have decided to suspend all integration-related work and activities,” Axis Chief Executive Officer Albert Benchimol and PartnerRe interim CEO David Zwiener wrote Tuesday in a letter to staff that was included in a regulatory filing.
After months of spurning talks with Exor, PartnerRe said Tuesday that it was open to negotiations to seek a better offer. Exor raised its bid for the Bermuda-based reinsurer on Monday with a special dividend of $3 a share that brings the cash offer to $140.50 a share, or more than $6.7 billion.
Axis and PartnerRe are seeking to create the world’s fifth-largest property-and-casualty reinsurer. Last week, Axis agreed to a 52 percent increase in the dividend that PartnerRe shareholders would get before the planned merger as it sought to fend off the hostile bid from Exor, the investment firm of Italy’s billionaire Agnelli family.
Benchimol and Zwiener told colleagues that they still believe their combination makes sense and is possible. PartnerRe’s decision to engage with Exor is consistent with the reinsurer’s board’s duty to review options, they said.
“Importantly, the PartnerRe board publicly reiterated that it has not changed its recommendation with respect to, and continues to support the transformative merger with, Axis Capital as it remains superior in value and terms to the current Exor proposal,” Benchimol and Zwiener said in the letter.
The shareholder vote for PartnerRe will remain set for Aug. 7, according to the letter. PartnerRe and Bermuda-based Axis postponed their initial plans to hold a shareholder vote on July 24 after Exor sweetened deal terms. The merger between PartnerRe and Axis is still on track to close in the third quarter, Michael Herley, a spokesman for Axis at Kekst & Co., said by telephone.