PartnerRe Reverses Stance to Seek Negotiations With Exor

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PartnerRe Ltd., the reinsurer that agreed to merge with Axis Capital Holdings Ltd., said it will enter negotiations with hostile bidder Exor SpA after the Italian company’s latest cash offer for more than $6.7 billion.

“The PartnerRe board has determined that the latest Exor proposal would reasonably be likely to result in a ‘superior proposal,’” the Bermuda-based reinsurer said in a statement Tuesday.

PartnerRe’s announcement marks a shift from refusing to negotiate since May and repeatedly calling Exor’s previous offers inadequate. The reinsurer’s board said Tuesday it still believes the merger with Axis would add more value, after Exor lifted its $137.50-a-share offer Monday by adding a $3 dividend payable to shareholders before a takeover is completed.

“As such, the board will seek to engage in negotiations with Exor, and offer Exor the opportunity to conduct due diligence, to determine whether the current offer can be improved both in its price and terms,” PartnerRe said.

PartnerRe gained $1.19, or 0.9 percent, to $136.16 at 2:24 p.m. in New York trading, while Bermuda-based Axis slipped 0.3 percent. Exor fell 1.6 percent in Milan.

Exor may be positioned to win, given the events of the last two days, Charles Sebaski, an analyst at BMO Capital Markets, said in a note. Axis Chief Executive Officer Albert Benchimol will find it hard to come up with a better offer for PartnerRe without losing support from his shareholders, he wrote. Shareholders of Axis and PartnerRe are scheduled to vote Aug. 7 on the planned merger.

‘End is Near’

“With the limits of Axis’s bidding nearly reached and PartnerRe’s board changing its stance toward Exor, it appears that the end is near in this transaction,” Sebaski wrote.

Exor had no comment, and Axis reiterated its position that it offers the best opportunity for PartnerRe holders.

“We provide continuity of interest for investors to participate in the future upside resulting from the substantial strategic and financial benefits of the combined company,” Axis said in a separate statement. “The exchange of PartnerRe common stock for combined-company common stock in the amalgamation is tax free to PartnerRe shareholders.”

Axis and PartnerRe have said a merger would create the world’s fifth-largest property-and-casualty reinsurer and give the companies scale to compete with larger rivals such as Berkshire Hathaway Inc. and Munich Re.

Exor, the billionaire Agnelli family’s investment firm, is seeking to diversify beyond industrial holdings such as Fiat Chrysler Automobiles NV. Chairman John Elkann has said a takeover would help PartnerRe weather market volatility and maintain company talent, while an Axis merger would cut jobs to create cost savings.

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