BENGALURU/MILAN:
Investment group Exor said on Tuesday it has entered a memorandum of understanding (MoU) to sell its 100% stake in Bermuda-based reinsurer PartnerRe to France’s Covea for $9 billion in cash.
Covéa has said that the acquisition of PartnerRe enables it to consolidate its diversification and internationalism through the establishment of a top tier European insurance and reinsurance company. The French insurance group sees PartnerRe as a “natural partner” and notes that the two companies share the same objectives of “underwriting discipline, financial strength and long-term value creation.”
The announcement came nearly one month after Exor, the investment vehicle of Italy’s Agnelli family, and the unlisted French insurer said they had entered talks over a possible sale of PartnerRe.
Exor, whose portfolio includes controlling stakes in carmakers Fiat Chrysler and Ferrari and in industrial machinery firm CNH Industrial, bought PartnerRe in 2016 for a total price of $6.72 billion in cash, after a long, hostile takeover battle.
The MoU also includes a cash dividend of $50 million to be paid to Exor before the closing of the deal, expected by 2020-end, Exor said in a statement.
Exor Chairman John Elkann said in the statement that PartnerRe was a stronger company today.
“We have now been presented with an outstanding chance for PartnerRe to further strengthen its competitive advantage while providing important new opportunities for its people under Covea’s ownership,” he said.
Thierry Derez, Chairman and CEO of Covéa, said: “This acquisition project comes at a time when the insurance sector is undergoing fundamental transformation, with emergence of new risks and new lifestyles, and increasing new participants entering insurance markets. It perfectly fits our growth strategy, our ability to adapt, the necessary complementarity of expertises and the importance of risks mutualization on a global basis. It would consolidate the future of PartnerRe and our mutual Group, serving the interests of our members and clients, as well as of our employees and partners.”
Emmanuel Clarke, the CEO of PartnerRe, added: “Over the past four years, under EXOR’s ownership, we have strengthened PartnerRe’s position as a global, diversified reinsurer, thanks to a continuous focus on enhancing our client and broker franchise, our underwriting and investments portfolios and our operational efficiency. And I’m confident we are in a very good position to further evolve under our new ownership.”The aggregate cash return for Exor following the completion of the deal would amount to $3 billion, including dividends paid by PartnerRe since 2016, the statement said.
Covea would enter into a definitive agreement to buy PartnerRe after it successfully completes a required consultation with workers councils, the statement added.
The French group said in a separate statement that it had approved the MoU with Exor, adding that the proposed acquisition of PartnerRe would enable it “to consolidate its diversification and internationalization, by creating a top tier European insurance and reinsurance group”.