PartnerRe asked to release preferred holder list to EXOR in buyout bid

By Susanna Moon

Chicago, July 9 – Sandell Asset Management Corp. said that PartnerRe Ltd. has limited the voting rights of its preferred shareholders by refusing to provide EXOR SpA with a list of the preferred holders.

The list of PartnerRe preferred holders is needed in order to provide them with information about the EXOR offer so as “to fairly evaluate the AXIS transaction in comparison to the EXOR offer,” according to a public letter from Sandell to Jean-Paul Montupet, chairman of the board of directors of PartnerRe.

Sandell said it believes the company’s board is preventing the release of the preferred holder list in order to protect the AXIS deal.

“This conduct is particularly outrageous in light of EXOR’s improved and superior offer which includes, among other things, a 100 basis point increase in dividends for PartnerRe preferred shareholders, call protection until 2021 and five years of capital distribution limits,” the letter explained.

As previously reported, EXOR said on July 7 that it had improved the terms of its offer to acquire PartnerRe, including a commitment to exchange PartnerRe’s preferred shares for new preferreds with better terms.

EXOR said it had legally committed to offer to exchange PartnerRe’s existing series D, series E and series F preferreds for new preferreds with identical terms to the existing securities but with the following improvements:

• A 100 bps increase in the dividend rate;

• Call protection until 2021. The PartnerRe preferreds become callable in the next three years, and the series D preferreds are already callable, EXOR notes. The company is committing not to redeem the preferreds before Jan. 1, 2021;

• EXOR will commit to limiting distributions to PartnerRe’s common shares to no more than 67% of earnings until Dec. 31, 2020, creating what EXOR called a stronger and better capitalized company. It noted that last year PartnerRe distributed 90% of earnings to shareholders.

“Under the enhanced EXOR binding offer announced today the terms will further provide PartnerRe preferred shareholders with higher return securities, non-callable for longer and in a company legally committed for five years to one of the most conservative capital distribution policies in the insurance and reinsurance industry,” EXOR said in a news release announcing the improved offer.

“This is in contrast to the AXIS/PartnerRe transaction which will adopt one of the most aggressive capital distribution policies in the industry.”

EXOR is offering $137.50 per share in cash for PartnerRe.

In its improved offer, EXOR said it will allow PartnerRe to solicit bids from third parties after signing with EXOR. In this period the termination fee will be reduced to $135 million.

EXOR also said that if PartnerRe is not required to pay the $315 million termination fee to Axis it will pass the full $6.39 per share value to PartnerRe shareholders.

EXOR chairman and chief executive officer John Elkann also gave a personal commitment to provide all information necessary to secure regulatory approvals.

In its own announcement Tuesday, PartnerRe said EXOR is putting an “inadequate value” on PartnerRe’s shares.

It also said EXOR’s bid has execution risks and would have a “negative impact” on PartnerRe’s credit ratings and its preferred shares.

PartnerRe is encouraging shareholders to vote in favor of the merger with AXIS Capital Holdings Ltd.

EXOR is a Turin, Italy-based investment company controlled by the Agnelli family and listed on the Milan Stock Exchange. PartnerRe is a Pembroke, Bermuda-based reinsurance company.

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