Axis Capital Holdings, which yesterday saw its planned merger with PartnerRe holed below the water by a counterbid from the Agnelli family's investment vehicle Exor, has said that it acknowledges the Exor bid and that it remains committed to a merger.
Axis Capital president and CEO Albert Benchimol said yesterday evening that "Axis Capital is fully committed to its combination with PartnerRe Ltd".
He added that the Axis transaction with PartnerRe "brings together two independently strong companies to create one broadly diversified global specialty insurance and reinsurance company whose scale, capital and enhanced market presence will form a powerhouse within the industry".
Benchimol said that the combined company would have "a strong capital position, significant financial strength, a combined world-class management team and industry-leading talent. As such, it will deliver significant operating and capital synergies, as well as an expanded solution set and product offering for clients and partners. We are confident that the combined company is positioned to deliver superior and sustainable value to all shareholders".
Earlier, PartnerRe had acknowledged the unsolicited proposal from Exor, stating that "consistent with its fiduciary duties, the PartnerRe Board of Directors will review the Exor proposal to determine the course of action that it believes is in the best interests of PartnerRe and its shareholders".
External observers generally felt that PartnerRe would find it difficult to reject an all-cash offer in favour of a merger that would be dilutive to book value in the short term. If it chose so to do, the better organised proxy firms would likely be quick off the mark to organise shareholders.
Should Axis decline the opportunity to come up with a counter-counterbid (under the terms of the Axis agreement, PartnerRe cannot change its recommendation until next week, five working days after the receipt of a counterbid) then it will get a $250m break fee, enough to boost its 2015 earnings by about a third, based on 2014 numbers.
The paradox is that this would make Axis more attractive to potential bidders. And the Exor move indicates that there is no longer a small number of potential merger permutations on the table.