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(Reuters) — French reinsurer Scor SE is suing rival Covea Mutual Insurance Group Co. and its chief executive for breach of trust after Covea announced it had abandoned plans for a friendly takeover of Scor.
Scor’s shares tumbled 13% to €35.86 ($40.93) on Tuesday, erasing almost all their gains since Covea offered to pay €43 a share and cutting more than $1 billion off Scor’s market value.
“Covea states that a transaction with Scor is no longer part of its strategic options,” Covea said in a statement.
Covea’s takeover proposal in August valued Scor at €8.2 billion ($9.4 billion) and it had said since then that it remained interested in a friendly tie-up, even after Scor Chief Executive Denis Kessler rejected the offer.
Scor said it was suing Covea and its chief executive, Thierry Derez, in a Paris criminal court for breach of trust.
Mr. Derez had sat on Scor’s board since 2016, but suspended that position when Covea made its bid approach and quit the board altogether a few weeks later.
In its statement, Scor alleged Mr. Derez breached his legal and fiduciary duties as a company director and broke company secrets.
Scor also said it would take the case to the local stock and bond regulator, as Covea had not warned it would be making a statement.
A spokesman for Covea declined to comment on the legal process initiated by Scor. A spokeswoman for Mr. Derez didn’t return phone calls seeking comments.
In its statement, Covea said it had been subjected to “continued attacks and hostile tactics” which had intensified in recent days.
The Covea spokesman declined to give details of the alleged attacks or to say who was behind them. Scor said it had not made any public comment on Covea since November.
Covea is a cooperative insurer that owns several brands and holds a significant market share in damage insurance in France. It is small abroad and had hoped a deal with Scor would bolster its presence in Europe, where there are signs of sector consolidation.
Recent deals have included Marsh & McLennan Cos. Inc. buying Britain’s Jardine Lloyd Thompson Group PLC for $5.7 billion, while Axa SA bought XL Group Ltd. for about $15 billion.
Covea is bound by a 2016 covenant that states it must seek Scor’s board approval if it wishes to raise its stake in Scor to above 10% from the roughly 8% it now holds.
The covenant expires in April, and investors had speculated it might launch a hostile bid after then if a friendly approach failed.
Scor said it was also launching legal action in London against investment banks Rothschild and Barclays PLC, accusing them of “serious breaches of confidence and trade secrets.”
Barclays has been advising Covea. Rothschild and Barclays had no immediate comment.
(Reuters) — French reinsurer Scor SE on Wednesday justified its rejection of a takeover bid from rival Covea, which valued the company at more than €8 billion ($9 billion), saying remaining independent would help performance.