France’s SCOR Group announced the official opening of its public tender offer for all of the publicly held registered shares of Converium Holding Ltd. The somewhat delayed offer – due to the time required to comply with Swiss takeover laws – aims to create the fifth largest global reinsurance Group by combining the two companies.
SCOR acquired 32.9 percent of Converium’s shares earlier this year (See IJ web site Feb. 19). The Swiss company at first refused SCOR’s takeover offer, but after the French reinsurer raised it, Converium’s management agreed to recommend approval of the plan to its shareholders (See IJ web site May 10).
The Offer is open from June 12, 2007 until July 9, 2007, but is “subject to extension in accordance with the provisions of the Offer Prospectus,” said SCOR’s announcement. For each Converium share tendered SCOR is offering 0.5 new SCOR Shares, CHF 5.50 ($4.42) in cash, and “an amount of €0.40 (app 30 cents) in cash, equal to 50 percent of the amount of the dividend paid per SCOR Share for the business year 2006, to be converted to CHF at the exchange rate EUR/CHF applicable on the day preceding the settlement of the offer.”
SCOR said its offer, which is not being made in the U.S., Japan, Canada, Australia and certain other countries where it would contravene securities laws, is “very attractive.” It represents a “significant premium” over Converium’s share price before the offer was first tabled in February.
In addition to putting the combined Group into the “top 5″ of the world’s multi-line reinsurers, SCOR cited the following advantages of accepting the deal:
- Premium income in the range of €5.5 billion [$7.3 billion];
- Market capitalization in the range of €3.7 billion [$4.92 billion];
- Long term capital base in the range of €4.8 billion [$6.38 billion];
- Leading positions in Europe in most lines of business and leading global market positions in selected areas such as life reinsurance, specialty lines, large facultative accounts and treaties;
- Well diversified sources of revenues between life and non-life lines, providing reduced earnings volatility and improved risk profile;
- Strong position to efficiently manage cycle thanks to a wider spectrum of business lines and services;
- Value enhancing combination of recognized pools of talents from both organizations focused on innovation and tailor-made solutions for clients and better able to adapt to today’s risk environment;
- €65 million [$86.4 million] of estimated annual pre-tax cost synergies from 2009 onwards;
- Maximum diversification benefit according to Solvency II requirements;
- State-of-the-art Enterprise Risk Management (ERM).
SCOR’s Chairman and CEO Denis Kessler, called the opening of the Offer “excellent news,” and indicated that the agreement reached with Converium’s Board and management was “an essential contribution for a rapid integration of the two groups and for the implementation of a common underwriting policy as soon as the 2008 renewals.”