PartnerRe has agreed a “definitive sale agreement” with Exor for $6.9bn, terminating its previous agreement with Axis Capital.
The Bermudian reinsurance company said the deal represents a 23% premium on its stock price, as of January 23.
Italian investment firm Exor will acquire all of PartnerRe’s outstanding common shares for an all-cash deal valed at $140.50 per share, which includes a special pre-closing dividend of $3.00 per share, for a total value of around $6.9bn.
John Elkann, Exor’s chairman and CEO, said: “Today’s agreement is very positive for PartnerRe and Exor. Under our stable and committed ownership, PartnerRe will continue to develop as a leading independent global reinsurer.”
PartnerRe chairman Jean-Paul Montupet, said: “We are pleased to reach this agreement with Exor, which we believe is in the best interest of our shareholders."
The Exor agreement ends PartnerRe’s planned coupling with Axis Capital, which had been the board’s official preference for an acquirer, announced on January 25.
“Accordingly, Axis Capital will receive $315m from PartnerRe. As a result of the termination of the amalgamation agreement with Axis Capital the Special Meeting of PartnerRe shareholders scheduled for August 7, 2015 has been cancelled,” said PartnerRe.
The deal marks a volte-face for PartnerRe's board, which had talked down Exor's previous bids for the firm and criticised the Turin-based investment firm over its conduct during negotiations, leading to a public spat between the two firms.
Elkann (pictured) said: “Exor looks forward to working with the Board of directors and the management of PartnerRe to ensure a successful path forward. I would like to thank our fellow shareholders for their continuing support over recent months.”
The new plan includes a “go shop” clause, which allows PartnerRe to solicit other competing takeover offers up to September 14.
“Since Exor made its initial offer to acquire the company in April, 2015, the PartnerRe board has been focused on maximizing value for our shareholders while positioning PartnerRe for long-term success,” said Montupet.
“We have carefully and thoroughly evaluated each development over the past several months, and believe that this thoughtful and deliberate approach was critical to delivering a transaction that represents a significant improvement in the price and terms of Exor’s original proposal,” said Montupet.
“Importantly, Exor is committed to ensuring that the unique culture, brand and business that our dedicated employees have successfully built over the past 20 years remain intact,” he added.
The terms of the new Exor agreement include a $225m partial reimbursement of the Axis Capital termination fees “if Exor fails to obtain required transaction approvals within one year or if there are other non-appealable legal prohibitions”.
Exor was handed a major boost in its bid to acquire PartnerRe last week when influential shareholder proxy firm Institutional Shareholder Services (ISS) recommended the Bermudian reinsurer’s shareholders reject an Axis Capital merger.
Coming two weeks before the now-cancelled shareholder vote, ISS said the Exor proposition offered "the better alternative for PartnerRe shareholders".
PartnerRe said the Exor transaction is expected to close in the first quarter of 2016, subject to approval by PartnerRe shareholders, regulatory clearances and other customary closing conditions.