Update: AXIS Capital, PartnerRe Sweeten Deal with Higher Special Dividend

Specialty insurer and reinsurer AXIS Capital Holdings Ltd and PartnerRe Ltd agreed to sweeten the terms of their merger agreement to fend off a rival bid from Italy’s EXOR SpA.

The companies agreed on Thursday to raise the special dividend component to $17.50 per share from $11.50, and match EXOR’s exchange offer for PartnerRe’s preferred shareholders.

The improved offer could finally bring an end to the three-way tussle between the companies.

Rock-bottom catastrophe insurance premiums, the rise of catastrophe bonds, low interest rates and stiff competition have prompted a wave of acquisitions among underwriters and reinsurers.

Insurance giant ACE Ltd. said earlier this month that it would buy upmarket property insurer Chubb Corp. for $28.3 billion.

EXOR, the investment vehicle of Italy’s Agnelli family, sweetened its offer for PartnerRe last week and raised the dividend rate for PartnerRe’s preferred shareholders by one percentage point.

AXIS and PartnerRe pushed back a special shareholder meeting to discuss to Aug. 7 after EXOR sweetened its bid. Reuters reported last week that AXIS and PartnerRe were considering tweaking their $6.2 billion merger agreement.

The companies agreed to merge in January.

Bermuda-based reinsurer PartnerRe’s preferred shares are worth just over $800 million and its preferred shareholders control about 40 percent of the company’s voting rights.

The new terms announced by AXIS and PartnerRe offer enough benefits to both preferred and common shareholders to swing the vote in AXIS’ favor, Meyer Shields, an analyst at Keefe Bruyette & Woods Inc, said.

EXOR SpA could not be immediately reached for comment.

AXIS’ shares were down 1.6 percent at $54.39 on the New York Stock Exchange. PartnerRe’s stock was up marginally.

(Editing by Sriraj Kalluvila and Simon Jennings)