ISS recommends vote against Axis/PartnerRe deal
Proxy firm Institutional Shareholder Services (ISS) has recommended PartnerRe shareholders vote against the merger of the Bermuda-based reinsurer with Axis Capital.
The proxy firm explained that the vote against the proposed amalgamation with Axis is “warranted in light of the availability of a superior and relatively certain all-cash offer from a competing bidder”.
Rival bidder, Italian investment company Exor, recently offered $140.50 per share and has welcomed the recommendation by ISS.
“[The] same uncertainty over market dynamics, overlaid with the post-merger execution challenges the combined company will face, may well suggest that the competing Exor cash bid, which gives shareholders both immediately-superior value and greater certainty of value, is a still-more prudent alternative,” said ISS.
On the amalgamation of PartnerRe and Axis, ISS explained that “there is nothing about the performance of either company to date which suggests that simply combining the two will drive a 30 percent increase in the price/tangible book value multiple the market will assign”.
The proxy firm also raised concerns about the PartnerRe board: “Still more disturbingly, the fact that it took a competing bidder to get the PartnerRe board to negotiate greater value for its own shareholders raises doubts about the efficacy of the entire negotiation process which led to the merger agreement with Axis in the first place.”
It also criticised PartnerRe’s criticisms of Exor’s bid as “small beer” and added that “for all of its creativity, the board's criticism of the EXOR offer does not appear substantiated”.
On regulatory reviews, ISS said: “Regulatory reviews appear unlikely to derail Exor's bid, given the latter's ample resources, prior ownership of an insurance business, significant stake in but lack of business overlap with PartnerRe, and the fact that - unlike Axis - its proposed transaction is unlikely to result in significant shrinkage of PartnerRe employees through merger ‘efficiencies’.”
