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Arch reportedly interested in buying Axis

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Arch reportedly interested in buying Axis

Arch Capital Group Ltd. is reportedly preparing a bid for fellow Bermuda insurer Axis Capital Holdings Ltd., turning Axis' three-way battle for control of Partner Re Ltd. into a four-way free-for-all.

The bid by Pembroke, Bermuda-based Arch is, according to reports in the Financial Times of London, reportedly worth as much as $65 a share, valuing Axis at about $6.5 billion.

Axis had originally proposed on Jan. 25 an $11 billion merger with Dublin, Ireland-based Partner Re to create the world's fifth largest reinsurer. This was complicated by a $130 a share all-cash bid from Italian investment firm Exor S.p.A. that would have valued Partner Re at $6.4 billion.

Axis subsequently enhanced its offer with a special dividend of $11.50, and Exor responded by raising its bid to $137.50, bringing Partner Re's value to $6.8 billion, as the companies exchanged barbs, and Exor and Partner were unable to reach negotiating terms.

Exor then said it would take its bid to shareholders.

The possibility of another bid opens a new front in the takeover battle.

“Axis has an attractive business mix and a strong group of underwriters. It doesn't surprise me that there's interest,” said Cliff Gallant, an analyst at Nomura Securities International Inc. in San Francisco.

A deal, however, may not be in the offing for Arch.

“My impression of Arch is that they are not feeling any sort of duress that would make them want to spend that much,” said Meyer Shields, managing director at Keefe, Bruyette & Woods Inc. in Baltimore.

“It's been sort of rumored before, but I think it's very unlikely,” said Mr. Shields, adding that “the idea has been circulating for a couple of weeks.”

Axis did not respond to inquiries, and an Arch spokesman said, “Arch does not have any comment on market rumors.”

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