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SCOR finds Covéa offer “fundamentally incompatible” with strategy

4th September 2018 - Author: Steve Evans

French reinsurer SCOR said that its Board decided to decline the approach from insurance group Covéa as it is “fundamentally incompatible with SCOR’s strategy of independence.”

SCOR logo

Earlier today it came to light that SCOR had been approached by French insurance group Covéa, which had offered the reinsurer a “friendly merger” valued at almost US $10 billion, at a share price of 43 Euros per share.

On evaluating the offer SCOR’s Board of Directors decided that as independence is a key factor of the reinsurers strategic development, “it would jeopardize the Group’s strong value-creating strategy” and also said that the proposed deal “reflects neither the intrinsic value nor the strategic value of SCOR.”

As a result, the Board of Directors of SCOR unanimously opted not to initiate discussions with Covéa, instead reiterating their trust in SCOR’s management to continue to create value and execute an independent strategy.

SCOR said that it acknowledged “Covéa’s decision to withdraw its proposal on a potential combination.”

SCOR has clearly laid out its desire to remain independent here, even at the significant uplift to its share price that Covéa’s offer would have delivered.

SCOR’s share price currently remains roughly 9% higher than it was before the revelation of the offer from Covéa, but at just under 39 Euros per share it is still some way below the offer price of 43 Euros.

How shareholders will look on that remains to be seen and comes down to whether they feel SCOR can generate that level of uplift over time as an independent reinsurer, or whether they feel a faster track to 43 Euros per share and a larger, more diverse business model may have been preferable.

Analysts have said that they feel shareholders should hold out for a higher valuation of SCOR, highlighting the independent option as one which could deliver the same gains over time.

Patience therefore seems key and as SCOR’s other anchor shareholders may not have been looking for an exit anyway, it’s likely that SCOR could be given the time to prove its independent approach is for the best.

Update:

SCOR also faced rumours about discussions with reinsurer PartnerRe today as well, which the firm was quick to deny.

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