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Covéa scraps plans to pursue SCOR deal

29th January 2019 - Author: Matt Sheehan

French insurance group Covéa has announced that it has abandoned its plans to pursue an acquisition deal targeting reinsurance giant SCOR.

covea-logo“Covéa takes note of SCOR’s refusal to enter into any discussions in relation to Covéa’s proposed friendly transaction offer addressed on 24 August 2018,” the company said in a statement.

“The continued attacks and hostile tactics targeting Covéa since then have intensified in the last few days,” Covéa added. “As a consequence, Covéa states that a transaction with SCOR is no longer part of its strategic options.”

Covéa originally made an offer to acquire SCOR for €8.2 billion (U.S $9.6 billion) in August 2018, which SCOR rejected on the grounds that it was “fundamentally incompatible” with its strategy of independence and would “jeopardize the Group’s strong value-creating strategy.”

SCOR came under fire from investors following its rejection of Covéa’s offer, which valued the company’s shares generously at €43 per share, with the President of French investment fund CIAM threatening to hold the SCOR’s management legally liable for gross mismanagement.

The reinsurer later reaffirmed its rejection and labelled Covéa’s takeover bid as “hostile and unfriendly,” and tensions culminated in the resignation of Covéa CEO Thierry Derez from SCOR’s Board of Director’s in November.

Covéa had previously stated that it intended to remain a long-term shareholder of SCOR following Derez’s removal, but would continue to pursue negotiations regarding a “friendly transaction.”

These had been expected to be initiated in April 2019 once Covéa had completed its three-year commitment not to increase its shareholding in SCOR beyond the threshold of 10%, but it appears the group has new abandoned these plans.

Covéa currently holds an 8.2% stake in SCOR and has been its largest shareholder since April 2016. Its successive CEOs have each been members of SCOR’s Board since Covéa originally became a shareholder in 2003.

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