There is more than a $4@share spread currently between Partner's stock price and the EXOR offer of &140.50@share. Now that ISS has dealt a heavy blow to the proposed amalgamation, the question is: Will this spread narrow in the two weeks leading to the announced share vote? Other folks I've spoken with, in fact, doubt that the special meeting will actually occur. They believe that a deal will be struck between PRE and EXOR in the interval. In any event, it should be an interesting next two weeks.
I just got a call from a proxy solicitation firm for PartnerRe. When I told the lady that I was supporting the EXOR bid she asserted that AXS/PRE had recently matched the former's offer. I informed her that I believed she was wrong and that the shareholder advisory firm ISS agreed with me and was recommending that PRE shareholders vote against the MOE. I also told the woman from the solicitation firm that I had lost confidence that the PartnerRe board was protecting my interests as a PRE shareholder. She told me she appreciated my position on the matter and would communicate it to PartnerRe's BODs. I hope she does, but I doubt it. It will be interesting to observe if AXS/PRE have one last trick up their sleeves to try to win the shareholder vote on August 7th. As a PartnerRe shareholder, I guess I should hope they do.
ISS, the largest shareholder advisory firm, has come out against the AXS/PRE MOE. Many folks believe this firm carries significant influence, especially with indexed funds, as to how they vote. It will be interesting to observe what reaction, if any, comes from AXIS, Partner, and EXOR.
Now that EXOR is able to engage in PartnerRe due diligence and negotiate with its board, will the firm further increase its offer for the reinsurer to secure the directors' agreement for its sale? PRE's board is still taking the official position of supporting the AXS/PRE amalgamation, as is AXIS's board. The $3.00@share increase in EXOR's bid got Partner to the negotiation table. What will it take to close the deal? Will it happen, especially prior to the August 7th shareholder vote? The drama continues.
Apparently Partner will not agree to the current EXOR bid and wants a further enhancement to these terms, whatever that may be. It's official position is that they continue to support the AXS/PRR MOE. Therefore, I suspect PRE will want to get something more out of EXOR before they capitulate. Consequently, the game isn't quite over, IMO.
Fdahope: I believe you are essentially correct. It appears that the PartnerRe board has effectively raised the WHITE FLAG. This whole escapade is an exercise in horrible corporate governance, IMHO. As a long-time PRE shareholder, I would never vote for these directors again. The irony is that once the EXOR transaction is completed you'll see the PartnerRe board taking bows for the deal that was struck.
PartnerRe's board this morning announced that EXOR's bid has a likelihood to be a superior offer and will both allow due diligence and engage in negotiations with EXOR. IMO, this is a tremendous turnaround by the directors of this reinsurers. However, the board is still arguing that shareholders should vote for the MOE. The plot thickens as the drama continues.
I haven't seen ISS et al. either. I think it is a low probability that AXS/PRE responds, but not impossible. Also, I wonder how Albert is dealing with his shareholders.
With EXOR having raised its bid, the ball is now in AXS/PRE's court as to whether it will raise its offer again in the battle to secure its MOE. I believe we're now in the realm of egos, not economics, so who knows. The plot thickens as the drama continues down to the August 7th shareholder vote.
EXOR raised its bid for Partner by $3.00@share through a proposed special dividend. Therefore, the value of its offer to common shareholders is now $140.50@share. The drama continues.
If I were an AXIS shareholder I might well feel as you do, unless one believes the MOE benefits will be so extraordinary. James, you'll recall that I said this process is now being motivated by the "egos" of AXS/PRE and not by the economics. I've seen such behavior in the past, and it is not so unusual. In any event, the question is: What will EXOR do? Frankly, I believe they are more rational than AXS/PRE, so any increase in their offer is 50/50 at best. It would be interesting if there is a revolt of the AXIS shareholders and now the AXS/PRE boards have to worry about the deal being voted down on their end. In which case, Partner could receive the break-up fee.
fdahope: you may very we'll be correct about the odds of an EXOR counterbid being les than 50-50. I do think, however, that they will have to up the ante modestly again to prevail. In any event, it should be good drama leading up to the August 7th shareholder vote.
Now that AXS/PRE have announced the latest enhancements to their amalgamation agreement, the ball is in EXOR's court as to how it will respond. I personally believe there is a 50-50 chance that it will up its offer for Partner. However, I expect that it will wait as long as possible to do so as to make it more difficult for AXS/PRE to respond. Moreover, it is interesting that there has been such a muted reaction to the share price of Partner in response to the latest announcement. IMO, this speaks to the level of cynicism among investors as to how favorable the MOE will be to the long-term enhancement of shareholder value. Anyway, it will be an interesting few weeks until the special shareholder vote on August 7th. The drama continues.
AXS/PRE just announced that they are increasing the special dividend to PartnerRe shareholders from $11.50@share to $17.50@share. This will obviously result in increased dilution to AXIS shareholders, but it's board must have thought it was worth the price to pay. This move will make things interesting as the battle between PRE and EXOR continues down to the wire, i.e., the special shareholders' meeting on August 7th.
AXS/PRE have pushed back their special shareholders' meeting until August 7th. However, the companies do not have a lot of time to announce new amalgamation terms, since these have to be communicated to their respective shareholders. Moreover, new proxy materials will have to be mailed to shareholders of record. All these things take time, and the clock is ticking. Moreover, there is increasing chatter about a possible bid for AXIS, which would further complicate the situation. This is one PartnerRe shareholder who would not respond well to another delay in the shareholder vote on the proposed MOE. It's time for all the parties to put their cards on the table and let the real owners of the companies decide their fate.
I believe you're missing the point. EXOR said it factored the break-up fee into what it would pay for Partner. Hence, whatever circumstances occur that result in no break-up fee and a successful EXOR transaction should result in PRE shareholders receiving an amount equivalent to the break-up fee. I strongly suspect that Partner shareholders would demand these funds as part of any deal they approve.
I hope you're correct and Arch buys AXIS while PRE accepts the EXOR bid, thus allowing Partner shareholders to pocket the break-up fee plus $137.50@share proceeds for the stock. It would be a great outcome for all concerned. Time will tell. The clock is ticking.
Everyone I talk to has interpreted the AXS/PRE press release to imply increased consideration for PartnerRe shareholders, since this company is in the battle with EXOR. However, we'll just have to wait and see what transpires. It is clear to me that AXS/PRE wouldn't have delayed the special shareholder's meeting if the boards were optimistic about the outcome of the vote.
Now that AXS/PRE have delayed their special shareholder vote to August 7th, it is increasingly likely that PartnerRe will report its 2Q15 EPS prior to this event. I believe it is highly likely that the reinsurer will announced results that significantly exceed the consensus forecast in order to further bolster the company's reported BVPS. By doing so, PRE's board will obviously argue that this is further proof of the inadequacy of the EXOR bid. Whether or not this position has validity, IMO, largely depends on the nature of the earnings beat. It is already well known that Partner is significantly over-reserved, and it is simply a matter of opinion as to the magnitude of this surplus. In any event, a BIG EPS number can't be a bad thing for PRE shareholders.
As the AXS/PRE boards consider further enhancements of their amalgamation agreement, it raises the question as to how far Albert Benchimol, AXS's CEO, can push his shareholders toward further dilution in order to obtain a "YES" vote without having a rebellion among his owners. Every dollar in increased compensation to PartnerRe common and preferred holders is $0.50@share dilution for AXS shareholders. We all know that the AXS/PRE boards want this MOE completed, but is there a breaking point?