Scor, the French reinsurer, said yesterday that it would launch a hostile bid for Converium, its Swiss rival, a little more than a week after antagonising its intended takeover target by taking a 32.9 per cent stake.
Converium shareholders are to be offered half a new Scor share plus four Swiss francs in cash for each share that they own. After Scor shares fell 2 per cent to €20.82 in the aftermath of the announcement, this implied an offer worth SFr20.87 a share, valuing the company at almost SFr3.1 billion (€1.9 billion).
Scor said a takeover of Converium would create the world's fifth-biggest reinsurer, behind Swiss Re, Munich Re, Berkshire Hathaway and Hannover Re, in terms of net written premiums.
"It is not a hostile offer," said Denis Kessler, Scor's chairman and chief executive, in an interview with the Financial Times yesterday. He said Scor's friendly approach had been prematurely snubbed. "They rejected without knowing the proposal."
He also dismissed the possibility of a nationalistic response to Scor's aggression from the Swiss business establishment, arguing that Converium was more multinational than Swiss.
Converium rejected Scor's proposal last night. Further comment should come tomorrow, when the Swiss reinsurer releases its 2006 results in a move brought forward as an initial line of defence.
In what has been a crucial transitional year after the group's crisis of 2004, analysts will focus on Converium's profitability and its dividend. Converium is expected to use the meeting to set out its longer-term strategy.
Much will depend on the decisions of key shareholders: Zürcher Kantonalbank, the public-sector bank for the Zurich region, holds almost 11 per cent; Dodge & Cox, a San Francisco-based fund manager, has 6.1 per cent; Capital Guardian Trust, another US investor, has 3 per cent; and JPMorgan holds 2.3 per cent, according to Converium's latest figures.
Converium shares rose 1 per cent to SFr21.8 in morning trading. Asked whether the shortfall meant that Scor would have to raise its offer, Mr Kessler would only say that "the offer we made is a very fair offer".
Mr Kessler said the offer would accelerate the upgrading of Converium's credit rating, which is still feeling the effects of 2004. That said, he admitted that Scor's plan to achieve pretax cost synergies of €65 million a year from 2009 was ambitious.
- (Financial Times service)
