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SCOR's Converium bid faces obstacles


BRUSSELS—The European Commission said March 16 that it would examine French reinsurer Scor S.A.'s 3 billion Swiss franc ($2.49 billion) hostile buyout bid on its smaller Swiss rival, Converium.

SCOR announced March 19 that it would hold an extraordinary shareholders' meeting on April 26 to discuss its buyout offer and get approval for financing its plans to merge with Converium to create the world's fifth-largest reinsurer, focused on Europe and Asia.

Analysts said Commission approval of the merger would likely be only a speed bump on SCOR's drive to swallow Converium, but more formidable hurdles remain. Converium has categorically rejected SCOR's offer, but in February SCOR acquired 32.9% of Converium shares, a substantial gulp.

A Commission spokesperson said the Commission would examine the proposed merger to decide if it would hurt competition in the European reinsurance sector. The Commission set a provisional April 20 deadline for a decision, when it could approve a merger, block it, or open an investigation that could take as along as 90 days.

An investigation could potentially derail Scor's offer, because the French company has set a very tight time schedule for its buyout offer, analysts said.

"Their timing is extremely ambitious, and so far this is based only on their board's decision. They have not even had an extraordinary general shareholders' meeting to get approval," said Beat Werder, head of communications for Converium.

Mr. Werder said "Swiss authorities are a bigger concern for SCOR [than the Commission]. The Federal Office of Private Insurance also has to approve their offer. FOPI has not yet even approved the package [of Converium shares] SCOR bought [from two major shareholders] last month."

Mr. Werder said Converium's position is that SCOR's offer "is not representative of the value of the company." He added that Converium is in talks with other potential suitors, but "There has been no formal offer."