PartnerRe Ltd. today announced that it has entered into definitive agreements amending the previously announced acquisition structure of PARIS RE Holdings Limited, the French-listed, Swiss-based diversified reinsurer. By moving directly to a merger vote in lieu of an exchange offer, the amended structure is expected to expedite PartnerRe’s acquisition of PARIS RE, while keeping unchanged the consideration granted to PARIS RE shareholders.
As previously announced, PartnerRe has entered into agreements to acquire 77%, and previously acquired approximately 6%, of PARIS RE’s outstanding common shares. In these transactions, PartnerRe offered (subject to certain adjustments) the same exchange ratio of 0.30 PartnerRe common shares for each PARIS RE common share. The closing of the 77% block purchase is currently expected to occur in October 2009, subject to certain conditions, including the approval of certain insurance and competition regulatory authorities. All PartnerRe and PARIS RE shareholder approvals required in connection with the closing of the 77% block purchase have been obtained. As a result of the closing of the purchase of the 77% of PARIS RE’s outstanding common shares referred to above, PartnerRe will hold 83% of PARIS RE’s outstanding common shares.
Following the closing of the block purchase, PARIS RE has agreed to call a meeting of its shareholders to vote on a proposal to effect a merger, governed by Swiss law, of PARIS RE into a wholly-owned subsidiary of PartnerRe. Through such merger, PartnerRe would acquire the remainder of PARIS RE’s outstanding shares at the same 0.30 exchange ratio. PartnerRe expects that PARIS RE will provide its shareholders, together with the invitation for the shareholders’ meeting, a shareholders’ information letter detailing the revised acquisition structure and informing the PARIS RE shareholders of their right to inspect the merger documentation (including the merger agreement and a merger audit report) during the 30-day period prior to the meeting. The merger, when approved by the holders of at least 90% of all outstanding PARIS RE voting rights, is expected to become effective in December 2009.
PartnerRe intends to obtain a listing for its shares on the Euronext Paris stock exchange, which will be effective upon completion of the merger. PartnerRe will also seek to implement measures to enhance shareholders’ access to liquidity including through the New York Stock Exchange. Further details as to these measures will be provided in another press release to be issued before the meeting of PARIS RE’s shareholders to vote on the merger.
In the revised acquisition structure, the merger will no longer be preceded by a voluntary exchange offer. However, if (1) the affirmative vote of the holders of at least 90% of all outstanding PARIS RE voting rights in favor of the merger is not obtained at the shareholders’ meeting to be called by PARIS RE’s Board of Directors or at any adjournment or postponement thereof, or (2) the merger is not effective on or prior to January 31, 2010, the original transaction structure will be reinstated.
In the coming weeks, PartnerRe may enter into agreements to purchase additional PARIS RE shares or secure voting commitments from certain other shareholders of PARIS RE in connection with the merger vote. Such purchases will be disclosed in filings with the Securities and Exchange Commission and with the Autorité des marchés financiers (the French listing authority) as required.
Prior to the closing of the purchase of the 77% of PARIS RE common shares, the consideration payable in all stages of the transaction (including the initial purchases of 6%) remains subject to adjustment up or down if the parties’ relative tangible book values diverge significantly. In addition, the number of PartnerRe shares payable for each PARIS RE share in the merger will be appropriately adjusted upwards to account for any dividends declared on the PartnerRe common shares having a record date following the closing of such purchase and prior to the effective time of the merger.
As previously announced, PARIS RE intends to effect a capital distribution by way of a reduction of the nominal value of all PARIS RE’s shares of up to CHF 4.17 per PARIS RE common share (the Swiss franc equivalent of $3.85 as of July 7, 2009, the date on which PARIS RE fixed the U.S. dollar/Swiss franc currency exchange rate to be used for the share capital repayment) to all of its shareholders. This distribution, which has been approved by PARIS RE’s shareholders, remains subject to the obtaining of regulatory approvals. To the extent that the distribution is not paid prior to the closing of PartnerRe’s purchase of the 77% of PARIS RE’s outstanding common shares described above, it will be paid immediately prior to the merger, or earlier, if all conditions to the payment of the capital distribution have been satisfied and PartnerRe has entered into commitments ensuring that the requisite PARIS RE shareholder approval for the merger will be obtained.
The amended structure of the transaction does not change the companies’ stated approach to all renewals prior to July 1, 2010, for which PartnerRe and PARIS RE will renew their portfolios separately, and with the underwriting approach customary for each company.
PartnerRe is listed on the New York Stock Exchange, and shareholders can obtain more information about PartnerRe from the documents it has filed with the SEC, which are available free of charge as described below.
