French insurer Covea examining new approach to Scor: Sources

(Reuters) – Unlisted French cooperative insurer Covea is working on a new approach to its planned takeover of reinsurer Scor S.E. after its friendly €8.2 billion ($9.54 billion) offer was rejected last month, two sources close to the deal said on Friday.

Covea, which had offered to buy all outstanding Scor shares, is seeking to convince Scor’s board to accept a deal by offering to keep the firm listed, the sources said.

A new bid would potentially be higher than the €43 a share originally offered, according to one of the sources.

“Covea would keep Scor independent with floating capital of at least 20%,” one source said. “Covea is ready to refloat a stake on the market after a takeover.”

Covea declined to comment.

Denis Kessler, Scor’s chairman and CEO, justified the decision to reject the original offer saying Scor needed to remain independent to perform.

Mr. Kessler, who has been CEO since 2002 and has overseen a 340% increase in Scor’s share price since 2009, said the recipe for Scor’s success was independence. “We are accountable for everything we do,” he said.

Mr. Kessler also dismissed the offer price as too low.

Analysts at brokerage Jefferies considered the 21% premium offered by Covea insufficient. They value the shares at €45-€46. Shares of Scor traded above €38 on Friday, up from €35.45 on Sept. 4, before Covea unveiled its bid.

Covea, an increasingly assertive player on the French insurance market, hopes the Scor deal will make it a major actor on the European stage, where a process of consolidation is set to open up more opportunities for acquisitions.

The insurer, which is Scor’s largest shareholder with an 8.5% stake, is bound by a 2016 covenant to submit any stake increase to the board for approval until at least April 2019 and plans to keep its word, one of the sources said.

The fragmented nature of Scor’s ownership, with no one holding a larger stake than Covea, makes it a potential hostile takeover target.

Industry experts say other firms, such as Germany-based Allianz S.E., could also consider a bid for the French reinsurer.

A spokesman from Allianz declined to comment.