EXOR to buy PartnerRe, to pay 100 bps step up or cash on preferreds

New York, Aug. 3 – PartnerRe Ltd.’s preferred stock holders will receive new shares with a dividend rate increased by 100 basis points or $42.7 million in cash under an agreement which will see EXOR SpA acquire the reinsurer.

PartnerRe has asked AXIS Capital Holdings Ltd. to terminate an earlier deal for AXIS to acquire PartnerRe and AXIS has agreed to the termination. AXIS will receive a $315 million breakup fee.

The transactions were disclosed in two company news releases and end a lengthy battle between AXIS and EXOR to acquire PartnerRe.

Under the agreement announced Monday, EXOR will acquire PartnerRe for $6.9 billion.

PartnerRe’s common shareholders will receive $140.50 per share, including a special pre-closing dividend of $3.00 per share.

If PartnerRe obtains a ruling from the Internal Revenue Service before closing that the exchange of the existing PartnerRe preferreds for new preferreds with an enhanced dividend rate and extended call date will not be treated as “fast-pay stock” for U.S. federal income tax purposes, PartnerRe will launch an exchange offer for its preferred shares.

Under the exchange, holders of the preferreds will be offered new preferreds with a dividend that is 100 bps higher and a new call date that will be the later of five years from issuance and Jan. 1, 2021.

Payments of dividends on common shares will be restricted to no more than 67% of net income until Dec. 31, 2020.

Other terms of the new preferreds will be identical to the existing shares.

If PartnerRe does not obtain an IRS ruling before closing, EXOR will pay $42.7 million in cash to holders of the PartnerRe preferreds.

In addition, holders will be offered new preferreds in an exchange that have an extended call date that will be the later of five years from issuance and Jan. 1, 2021.

Again, payments of dividends on common shares will be restricted to no more than 67% of net income until Dec. 31, 2020.

Other terms of the new preferreds will be identical to the existing shares.

PartnerRe, a reinsurance company, will continue to be based in Pembroke, Bermuda.

EXOR is a Turin, Italy-based investment company controlled by the Agnelli family.

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