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SCOR & Covéa rumours continue, as activist investors mobilise

19th September 2018 - Author: Matt Sheehan

French insurance group Covéa is continuing to examine new approaches to a potential acquisition of SCOR after its offer of €8.2 billion (US $9.6 billion) was rejected last month, while pressure mounts for SCOR as activist investors urge CEO Denis Kessler to engage in talks.

SCORSources at Reuters said that Covéa is seeking to convince SCOR’s board to accept a new deal by proposing a higher bid and offering to keep the firm listed.

“Covea would keep Scor independent with floating capital of at least 20 percent,” one source told Reuters. “Covea is ready to refloat a stake on the market after a takeover.”

Meanwhile, Catherine Berjal, President of French activist investment fund CIAM, which holds a 0.77% stake in the reinsurer, said in a letter to SCOR that the management was legally obliged to engage in talks with Covéa.

“I would not hesitate to hold you and the Board of Directors legally liable for a decision which would constitute gross management negligence,” she told Kessler in the letter.

The move by CIAM shows support for the takeover bid by Covéa, which already owns about 8.5% of SCOR, and indicates that some minority shareholders may disagree with the management’s dismissal of the offer.

Covéa’s initial €8.2 billion bid represented a share price of €43 per share, which was a more than 20% premium to SCOR’s share price in August, although the company’s share price jumped by 9% to €39 after the offer from Covéa was revealed.

In the letter, Berjal also asked Kessler to detail his proposals to boost the share price of SCOR above the level offered by Covéa.

“I am … eager to hear the measures that you plan to take to ensure that Scor’s share price reflects its intrinsic value, which, as your statement implies, should be well above 43 euros per share,” she said.

However, SCOR’s Board of Directors claimed that a merger with Covéa would be “fundamentally incompatible with SCOR’s strategy of independence” and would “jeopardize the Group’s strong value-creating strategy.”

The offer also seemed to be too low for SCOR, who said that the proposed deal reflected “neither the intrinsic value nor the strategic value of SCOR.”

The acquisition, described by Covéa as a “friendly merger,” would be more a merger of diversified equals if it were approved, as Covéa Group has over 11.5 million policyholders and customers, and commands roughly €16 billion in premiums and €24 billion of eligible capital.

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