SCOR says non to Covea takeover

French reinsurer SCOR has rejected an all-cash offer from mutual Covea that appears to leave no love lost between the two. In a statement to the press, SCOR said it “reaffirms its independence and takes note of Covea's decision to withdraw its proposal on a possible merger". SCOR confirmed that on August 24, 2018 Covea sent a letter to SCOR proposing to initiate discussions on a Covea project to acquire a majority stake in the capital and voting rights of SCOR, it added. The deal would have been worth €8.3bn ($9.58bn). “The conditions of implementation of this project described in Covea's letter included the favourable recommendation of SCOR's board of directors and the signing of a matching agreement accepted by SCOR.” Covea already has an 8.2% stake in SCOR, and offered to buy the remaining stock for €43 a share. As of 4pm local time, SCOR's share price was trading at €38.30. According to SCOR's statement, the reinsurer's board of directors “reviewed in detail the terms and conditions of this unsolicited proposal and concluded that it was fundamentally inconsistent with SCOR's independence strategy, which is a key factor in its development, that it would call into question its highly value-creating industrial project and that it reflects neither the intrinsic value of SCOR nor its strategic value”. “This project is unanimously opposed by the SCOR executive committee. In these circumstances, any proposed public offer would be deemed hostile.” SCOR's board of directors also voted unanimously to refuse to enter into discussions with Covea. He reaffirmed his total confidence in SCOR's leadership to continue to create value. Covea's attempt to acquire SCOR would have almost doubled the mutual's premium income, as well as diversify its business beyond home, auto, life and health insurance coverages. In July, SCOR announced that it took a €62m hit for the second quarter of 2018 from last year’s US tax reform. The firm describes it as being at the lower range of the potential expense it could have faced. Quarterly net income for the French reinsurer was €96m, down from €153m recorded during the same three month period in 2017. Withholding the effects of the US tax reform, the firm’s net income was €158m, reflecting the continued success of its “vision in action plan”. "SCOR delivers strong results in the first six months of 2018, outperforming both its profitability and solvency targets,” said chairman and chief executive of the company, Denis Kessler, at the time.

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