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PartnerRe to acquire Swiss rival in US$2b deal
Source: Agencies |
July 7, 2009, Tuesday
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REINSURER PartnerRe Ltd is to acquire Swiss rival Paris Re in a cash and stock deal worth roughly US$2 billion, it said on Sunday.
Under the terms of the transaction, Bermuda-based PartnerRe will swap 0.30 of its common shares for each Paris Re common share, acquiring 57 percent of Paris Re's outstanding common stock in the process.
PartnerRe recently acquired 6 percent of Paris Re's shares at the same exchange ratio. PartnerRe said the block purchase is expected to occur in the fourth quarter. After that, PartnerRe will make a voluntary exchange offer for remaining shares at the same price.
PartnerRe said the stock deal should add US$1.7 billion in new shareholder equity to the company. Paris Re also plans to subsequently distribute US$310 million in cash, or US$3.85 per common share, to its shareholders in a special dividend.
Patrick Thiele, president and CEO of PartnerRe, said the deal will "provide more balance and stability to our company in the face of uncertain and volatile financial and reinsurance markets."
The property and casualty sector has seen hefty investment losses in the past year due to substantial volatility in the financial markets, on top of paying out large claims in 2008.
PartnerRe provides property, casualty and other kinds of reinsurance to primary insurers, financial and industrial companies. For the year ended December 31, the company reported total revenue of US$4 billion. On March 31, total assets were US$16.3 billion.
Paris Re was created by a consortium of private equity funds led by Stone Point Capital LLC, which in 2006 agreed to purchase AXA Re and merge it with the Switzerland-based company. For the year ended December 31, the company reported revenue of US$1.40 billion. On March 31, total assets were US$6.75 billion.
PartnerRe shares closed at US$64.40 on Thursday ahead of the holiday weekend and are down about 16 percent from its 52-week high of US$76.96 reached last autumn.
Under the terms of the transaction, Bermuda-based PartnerRe will swap 0.30 of its common shares for each Paris Re common share, acquiring 57 percent of Paris Re's outstanding common stock in the process.
PartnerRe recently acquired 6 percent of Paris Re's shares at the same exchange ratio. PartnerRe said the block purchase is expected to occur in the fourth quarter. After that, PartnerRe will make a voluntary exchange offer for remaining shares at the same price.
PartnerRe said the stock deal should add US$1.7 billion in new shareholder equity to the company. Paris Re also plans to subsequently distribute US$310 million in cash, or US$3.85 per common share, to its shareholders in a special dividend.
Patrick Thiele, president and CEO of PartnerRe, said the deal will "provide more balance and stability to our company in the face of uncertain and volatile financial and reinsurance markets."
The property and casualty sector has seen hefty investment losses in the past year due to substantial volatility in the financial markets, on top of paying out large claims in 2008.
PartnerRe provides property, casualty and other kinds of reinsurance to primary insurers, financial and industrial companies. For the year ended December 31, the company reported total revenue of US$4 billion. On March 31, total assets were US$16.3 billion.
Paris Re was created by a consortium of private equity funds led by Stone Point Capital LLC, which in 2006 agreed to purchase AXA Re and merge it with the Switzerland-based company. For the year ended December 31, the company reported revenue of US$1.40 billion. On March 31, total assets were US$6.75 billion.
PartnerRe shares closed at US$64.40 on Thursday ahead of the holiday weekend and are down about 16 percent from its 52-week high of US$76.96 reached last autumn.
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