Activist Sandell Sends New Letter to PartnerRe Board

Jul 9 2015 | 2:53pm ET

Activist hedge fund Sandell Asset Management has sent another scathing letter to PartnerRe’s board of directors, this time ramping up criticism of the company’s decision not to release a list of preferred shareholders to Exor SpA, a company that made an unsolicited $6.8 billion offer for PartnerRe earlier this year. 

“We are writing today to express our continued concern that the ongoing actions of the Board raise significant questions about the Board’s commitment to a fair process and are inconsistent with corporate governance best practices,” the letter wrote.  

Bermuda-based PartnerRe is planning to merger with rival Axis Capital Holdings, a move that Sandell believes is contrary to shareholder best interests. 

“We believe that the Board's decision to deny the customary request by EXOR to be provided with a list of PartnerRe Preferred Shareholders, in order to provide such holders with information about the EXOR offer, is unreasonable and frustrates the ability of Preferred Shareholders to fairly evaluate the AXIS transaction in comparison to the EXOR offer, and so denies them their right to vote on a fully-informed basis,” Sandell wrote. 

In the letter, the activist hedge fund accuses ParterRe management of deliberately withholding the list “in order to protect the AXIS transaction, in disregard of the shareholders' best interests.” 

Sandell has consistently argued that Exor’s offer for the business was superior to the one from Axis, including a 100 basis point increase in dividends for PartnerRe preferred shareholders, call protection until 2021 and five years of capital distribution limits.

“We fail to understand how the Board’s refusal to disclose to EXOR the identity of PartnerRe's Preferred Shareholders, so that EXOR could directly contact such holders in order to allow them to fairly consider the EXOR offer, is consistent with your fiduciary duties to such shareholders and the Board’s stated desire to maximize value for all shareholders,” said the letter.

This is the second time Sandell has used an open letter to communicate with PartnerRe’s board. The first, on May 22, decried management’s position that constructive talks with Exor were impossible and the merger with Axis would proceed as planned. Sandell, which owns less than 1% of PartnerRe, felt the company should negotiate further with Exor before dismissing the offer. 

PartnerRe shareholders are scheduled to vote on the Axis merger on July 24. The company’s shares traded hands Thursday afternoon for just under $131, compared to $133 per share at the time of the May letter and Exor’s offer price of $137.50 per share. 

Exor SpA is an investment firm for the Agnelli family of Fiat fame. The firm owns more than 9% of PartnerRe and is the company’s largest shareholder. It has prepared proxy materials for shareholders to vote against the proposed merger with Axis and recently held an information session on the subject.

The dissent has reportedly led to Axis and PartnerRe discussing ways to sweeten Axis’s original $6.2 billion bid. 

Sandell was formed in 1998 and pursues an event-driven and special situations strategy, often through activist agendas. It has approximately $1 billion in assets under management.

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