Exor looks to thwart Axis offer for PartnerRe

Exor, the investment company of Italy's Agnelli family, the dynasty behind Fiat, has launched a $6.4bn bid to scupper Axis Capital's tie-up with the US-listed reinsurer PartnerRe.

The Milan-listed group put forward a plan on Tuesday to acquire PartnerRe for $130 a share in cash, pitched at a 16 per cent premium to Axis's all-share offer.

The move comes almost three months after directors of Axis and PartnerRe, based in Bermuda, agreed to a "merger of equals". It would have created a new S&P 500 company and the world's fifth-largest property and casualty reinsurer.

However, speculation has mounted that another party would make a competing offer.

Dealmaking in the reinsurance industry - which allows insurance companies to transfer the risks of hurricanes, earthquakes and other disasters - is heating up. Intense competition has pushed premiums in important areas of reinsurance down to their lowest levels in years, encouraging underwriters to consolidate.

PartnerRe shares jumped 9.1 per cent to $129.96 in mid-afternoon New York trading after Exor's offer was unveiled. Shares in Axis Capital were flat at $52.82.

In a note, analysts at Exane BNP Paribas described Exor's bid as "a logical move." "We always thought that the Axis-Partner Re merger did not maximise the interest of Partner Re shareholders: the merger was at a nil premium."

In a statement, Exor said: "Compared to the all-share combination with Axis, it provides PartnerRe shareholders with superior value and greater certainty since it is all cash, fully financed, and does not require a capital increase by Exor nor a vote by its shareholders."

Exor's planned takeover is being personally pursued by John Elkann, Agnelli family scion and chairman of Fiat Chrysler Automobiles. He said he had "every confidence" that PartnerRe's shareholders and directors would support the proposal. Exor added its takeover was "envisaged to be friendly".

The Italian group has been seeking an investment for several years to diversify its exposure to the industrial sector through FCA and its sister company CNH Industrial.

The Agnellis had previously invested in financial services including in Italy's largest bank Intesa Sanpaolo. Mr Elkann was keen to extend his exposure in financial services because it runs to a different cycle from the industrials sector, a person close to him said.

A year ago, speculation mounted that a trust controlled by the Agnelli family was set to buy a stake in Swiss Re, but this was denied by the Zurich-based reinsurer.

Exor, which was a minority investor in PartnerRe when it was formed in 1993, said on Tuesday there was "significant long-term potential for a global reinsurer such as PartnerRe".

Exor said it would fund the deal with the €2bn in cash it has on hand and with the proceeds from the expected sale of its real estate group Cushman and Wakefield. The Italian group is being advised by Chicago-based BDT & Co along with Citigroup and Morgan Stanley, who have also agreed to provide credit financing for the deal.

The sale of PartnerRe is the latest in a series of transactions in the sector in recent months. XL has agreed to buy smaller UK-listed rival Catlin for £2.8bn and RenaissanceRe struck a deal in November to purchase Bermuda-based rival Platinum Underwriters for $2bn.

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