Reinsurance solutions provider PartnerRe Ltd. (PRE) Monday said it has amended the acquisition structure to acquire Paris Re Holdings Ltd., the Swiss-based diversified reinsurer, in order to expedite the process, while keeping unchanged the consideration granted to Paris Re shareholders.
Under the amended structure, the company moves directly to a merger vote in lieu of an exchange offer, following the purchase of 83% stake in Paris Re.
In July, PartnerRe agreed to acquire all the outstanding shares of Swiss rival Paris Re in a multi-step all-stock deal valued at about $2.0 billion, including a $310 million cash distribution by Paris Re.
PartnerRe has entered into agreements to acquire 77%, and previously acquired about 6%, of Paris Re's outstanding common shares. In these transactions, PartnerRe offered 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, 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, PartnerRe will now hold 83% of Paris Re's outstanding common shares.
Following the closing of the block purchase, Paris Re has agreed to schedule a shareholders' meeting to vote on a proposal to effect a merger of Paris Re into a wholly-owned subsidiary of PartnerRe.
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.
In the revised acquisition structure, the merger will no longer be preceded by a voluntary exchange offer. However, if 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 or the merger is not effective on or prior to January 31, 2010, the original transaction structure will be reinstated.
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.
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 to all of its shareholders.
PRE closed Monday's regular trading session at $77.80, up $3.15 or 4.22%. In the after-hours, the shares further gained 53 cents.
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