Update: Bermuda Court Rules in Favor of PartnerRe; EXOR Responds

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The Supreme Court of Bermuda has denied EXOR’s request to obtain shareholder information from PartnerRe, the reinsurer that is seeking to merge with AXIS Capital Holdings and avoid a hostile takeover from EXOR SpA.

“EXOR’s application has been denied and EXOR has been ordered to pay PartnerRe’s costs. We are pleased with this outcome,” said Bermuda-based PartnerRe in a statement issued on June 5.

A responding statement from EXOR, the Italian investment company controlled by the Agnelli family, said:

“Despite PartnerRe’s refusal to provide the requested information, EXOR will actively solicit PartnerRe’s common and preferred shareholders to vote against the AXIS transaction at the PartnerRe special general meeting on July 24, 2015 in light of EXOR’s superior all-cash $137.50 per share binding offer for PartnerRe.”

EXOR said it has begun to mail proxy materials to PartnerRe shareholders who have until July 26 to accept its offer.

On June 8, PartnerRe’s board reaffirmed its recommendation of the merger with AXIS Capital.

The company said it has filed an investor presentation detailing why a merger with AXIS would protect investment and preferred dividend, while illustrating the “downside risk to the value of the PartnerRe preferred shares in the context of EXOR’s proposed acquisition.”

In part, the statement said there was “significant additional leverage that would be incurred by EXOR to fund the acquisition of PartnerRe, combined with EXOR’s lower credit rating,” which would result in “considerable risk that the credit rating of the preferred shares is downgraded, to BBB-, only one notch above ‘junk'”.

Also on June 8, EXOR issued a statement, once again urging preferred PartnerRe shareholders to vote “against” the merger with AXIS, which EXOR described as “an inferior transaction compared to the one proposed by EXOR SpA on May 12…”

“EXOR is the largest common shareholder of PartnerRe and is committed to ensuring the long-term strength and success of our company is maintained,” EXOR said. “We believe in this regard our interests are clearly aligned. Instead, the AXIS transaction that you’re being called to vote upon has been crafted by some members of the board of directors that stand to benefit – personally and financially – from the completion of such amalgamation.”

At the time of this writing, PartnerRe had not responded to these comments.

History of Proposed Merger

In January, AXIS Capital Holdings Ltd. and PartnerRe Ltd. announced they would merge to create a company with a market value of almost $11 billion. Under the AXIS agreement, PartnerRe shareholders would get about 51.5 percent of the combined company. An enhanced deal, offered after EXOR’s April 14 offer, also would provide PartnerRe’s common shareholders with a special dividend of $11.50 a share.

EXOR in May raised its offer to $137.50 a share in a $6.8 billion cash deal.

Source: PartnerRe and EXOR