PartnerRe delves into ‘unacceptable risks’ of Exor offer

PartnerRe has condemned Italian investment company Exor’s “inferior offer” and criticised its “unacceptable risks” in a presentation to shareholders.

In the latest round of the bidding war for the Bermuda-based reinsurer, the board criticised Exor for consistently refusing to “address serious risks and flaws in its illusory offer for PartnerRe”. It added that “shareholders should not be misled by Exor’s rhetoric and false claims”.

With the shareholders meeting on July 24, 2015, the board continued to recommend that shareholders vote for its amalgamation agreement with Axis Capital.

In a statement, PartnerRe outlined details concerning walkaway, regulatory and timing risks posed by Exor’s bid.

“It would be irresponsible for the PartnerRe board to abandon a transaction with compelling value and certainty to PartnerRe shareholders in favour of a potential transaction with substantial optionality, thereby exposing PartnerRe shareholders to the loss of any transaction and $315 million out-of-pocket expenses,” said the board.

As a walkaway risk, the board said that negative developments in the protracted period to closing could cause Exor parties to walk away, while Exor’s ability and desire to close may be significantly impaired by “financial pressures from substantial transaction leverage, its ability to raise cash, and its commitments to other investments”.

PartnerRe added that the Axis merger will close in the third quarter, unlike the Exor offer which will not close this year.

“This protracted timeline and the walkaway risks in the EXOR offer expose the PartnerRe business to the risk of a failed transaction through the renewals period which could be highly damaging,” said PartnerRe.