PartnerRe, AXIS Improve Merger Terms in Advance of Shareholder Vote

PartnerRe and AXIS Capital Holdings Ltd. have released sweetened terms of their merger deal intended to entice shareholders in advance of their Aug. 7 vote on the matter.

The package includes an improved one-time cash dividend for PartnerRe shareholders, in addition to better terms regarding PartnerRe preferred shares. These actions are intended to counter a $6.8 billion unsolicited all-cash bid that Italian investment firm EXOR SpA submitted for PartnerRe initially in the spring.

Among the new terms:

• A one-time cash dividend of $17.50 per common share payable to PartnerRe common shareholders after the deal closes. It is a big increase over the initially proposed $11.50 per share dividend.
• The merger is no longer conditioned on the absence of a three-notch rating downgrade from A.M. Best to A-, with promises that the deal will close as planned in the 2015 third quarter.
• PartnerRe and AXIS have agreed to match terms contemplated by EXOR’s proposed exchange offer for PartnerRe preferred shares, if the IRS determines that such a transaction would not result in an IRS reporting requirement and penalty fee for PartnerRe preferred shareholders. If the IRS agrees, then PartnerRe preferred shareholders would receive, in part, newly issued preferred shares reflecting a 100 basis point increase in the current dividend rate, subject to certain exemptions.

In prepared remarks, PartnerRe Chairman Jean-Paul Montupet said that the “enhanced terms” with AXIS Capital will help shareholders “realize the value of the combination.

“As we approach the August 7th meeting date for shareholders to approve the amalgamation, we are confident that they will recognize the unique potential of this transformative combination,” Montupet said. “In addition to the cash special dividend, shareholders will benefit from owning a significant interest in a world-class specialty insurance and reinsurance franchise.”

AXIS Capital CEO Albert Benchimol added that he continues to see merit in the PartnerRe/AXIS Capital merger, which was first disclosed in January.

“The combination represents a unique opportunity to create a financial powerhouse in the industry with a strong franchise, robust earnings power and double-digit ROE,” Benchimol said in a prepared statement.

Together, they would create the world’s fifth-largest property/casualty reinsurer with diversified risks.

EXOR has continued to insist that its $137.50 per share all-cash offer for PartnerRe is the superior option, and has urged shareholders to vote against the merger.

Sources: AXIS Capital Holdings Ltd., PartnerRe