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Exor emerges as winner of PartnerRe acquisition saga

Exor emerges as winner of PartnerRe acquisition saga

Italy's Exor S.p.A. will pay $140.50 a share to acquire PartnerRe Ltd., ending the months-long takeover drama for the Pembroke, Bermuda-based reinsurer.

The deal dashes the hopes of a merger with Axis Capital Holdings Ltd., which first proposed an $11 billion merger with PartnerRe in January.

Turin, Italy-based Exor launched its all-cash bid in April at an initial $130 a share, after which the two sides spent months exchanging rhetoric and periodically improving their respective offers.

Exor's purchase of PartnerRe, announced Monday, is expected to close in the first quarter of 2016, subject to regulatory and shareholder approval.

The termination of the Axis/PartnerRe merger agreement triggered the payment of a $315 million breakup fee from PartnerRe to Axis.

Just last week, two major proxy advisory firms recommended that PartnerRe shareholders accept the Exor bid and vote against the merger with Axis.

As part of their agreement, PartnerRe retains a “go-shop” period until Sept. 14, during which it may entertain other offers, but that likelihood is seen as small.

“We think we would have heard from any other bidders by now,” said analysts at Keefe, Bruyette & Woods Inc. in a research note.

In the meantime, Axis finds itself without a partner and could become a takeover prospect.

“Axis could come into play itself,” said Amit Kumar, New York-based vice president and senior analyst of insurance at Macquarie Capital (USA) Inc.

Axis, however, is getting the breakup fee, has announced a $300 million accelerated share repurchase program and remains recommended by both analysts as a buy recommendation with upside potential.

PartnerRe, meanwhile, remains under review with negative implications at Fitch Ratings Inc., which cited integration concerns.

“The transaction with Exor presents near-term credit negatives to (PartnerRe) given execution and integration risk inherent to an acquisition,” Fitch said in its report Monday.

John Elkann, chairman and CEO of Exor, said in a statement Monday the deal is “very positive for PartnerRe and Exor” and that “under our stable and committed ownership, PartnerRe will continue to develop as a leading independent global reinsurer.”

PartnerRe Chairman Jean-Paul Montupet said in a statement Monday that he believes the deal with Exor “is in the best interest of our shareholders.”

Albert Benchimol, president and CEO of Axis Capital, said in a Monday statement that he was “disappointed that the merger will not proceed” but has “no doubt that the best days for Axis Capital, our employees, clients, brokers and shareholders lie ahead.”

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