Somebody at SCOR must have seen “The Godfather” recently, as the French reinsurer finally made Converium an offer it couldn’t refuse. After nearly three months of wrangling and battling press releases the Swiss reinsurer has agreed to SCOR’s latest proposals.
After repeated advice to its shareholders to reject SCOR’s offer (See IJ web site April 16), Converium said they should now accept SCOR’s improved offer, valued at CHF 23.20 ($19.07) per share. It provides that each Converium share be exchanged for 0.5 new SCOR shares plus CHF 5.50 ($4.52) in cash. The offer will not be reduced by Converium’s proposed CHF 20 cents (US16.44 cents) per share dividend. The share exchange is the same as SCOR previously offered, but it has increased the cash payout from CHF 4.00 ($3.287).
SCOR acquired a 32.9 percent stake in Converium earlier this year (See IJ web site Feb. 19).
Other than the increased value of the offer, the buyout terms, previously issued by SCOR, remain the same. These include a commitment not to layoff or fire any Converium employees for a year after the transaction closes (except for cause); a commitment to “maintain a strong presence in Zurich, and to make Zurich one of the three key European hubs of the combined Group, together with Paris and Cologne.”
In addition SCOR’s Gilles Meyer, member of its Executive Committee, would become a Member of the Board of Converium.
Concerning the U.S. lawsuits, Converium has apparently agreed to withdraw them as well as a proposal for a capital reduction at the Annual Meeting of shareholders.
“Converium and SCOR underwriting teams will start as soon as possible with the preparation of a joint underwriting plan for the 2008 renewal season and further develop SCOR’s ‘Dynamic Lift’ strategic plan for the combined Group,” said the bulletin announcing the acquisition.
SCOR’s Chairman and CEO Denis Kessler expressed his satisfaction at having worked out an agreement with Converium. He noted that the combination of the two European reinsurers has created the conditions necessary “to create together a Top 5 global multi-line reinsurance company with European roots and global reach.”
Converium’s Chairman Markus Dennler called SCOR’s revised offer a “significant improvement in the consideration offered to our shareholders,” and indicated that it “recognizes our remarkable turnaround of the past two years. It further reflects the exceptional quality of our staff, longstanding client relationships and excellent growth prospects supported by a strong capital position.”
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