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SCOR reaffirms rejection of ‘hostile’ Covéa takeover

28th September 2018 - Author: Matt Sheehan

French reinsurance giant SCOR has released a statement reaffirming its rejection of Covéa’s “hostile and unfriendly” acquisition offer of €8.2 billion (US $9.6 billion), and has called for Thierry Derez, Chief Executive Officer (CEO) of Covéa, to permanently resign from SCOR’s Board of Directors.

SCOR logoSCOR said that a meeting of its Board on September 21 had unanimously decided to “affirm in all respects its decision of August 30, 2018 to refuse to enter into discussions with Covéa.”

Additionally, it said that Thierry Derez, who has served as a member of SCOR’s Board since 2013, is in a “general conflict of interest situation with regard to the Company and, consequently, must respect his commitment to resign.”

Covéa, which holds an 8.2% stake in SCOR and has been its largest shareholder since April 2016, announced yesterday that Derez was to temporarily step down from SCOR’s Board until the 2019 shareholder meeting.

However, SCOR has since clarified that, as an individual, Covéa is not positioned to speak on Derez’s behalf, and has said that “the concept of a ‘temporary withdrawal’ of a director is not set out by law or by SCOR’s bylaws or the Internal Regulations of the Board of Directors.”

Covéa stated that it still intends to remain a long term shareholder of SCOR following Derez’s removal, although it will continue to pursue negotiations regarding a ‘friendly transaction.’

SCOR also outlined its reasons for rejecting Covéa’s bid, which included its “detrimental consequences for the Group, as well as its shareholders and employees; the lack of any strategic rationale; and a price that reflected neither the intrinsic value nor the strategic value of SCOR.”

It originally rejected Covéa’s offer on the grounds that a merger deal was “fundamentally incompatible with SCOR’s strategy of independence” and would “jeopardize the Group’s strong value-creating strategy.”

Additionally, the company acknowledged Covéa’s commitment to an agreement that prohibits it from increasing its shareholding in SCOR beyond the threshold of 10% for a period of three years.

SCOR has come under fire from activist investors following its rejection of Covéa’s offer, which valued the company’s shares generously at €43 per share.

Catherine Berjal, President of French investment fund CIAM, invited SCOR CEO Denis Kessler to outline his proposals for increasing the company’s share price above the level offered by Covéa, and threatened to hold SCOR’s management legally liable for gross management negligence.

In a second letter, she also addressed reports that SCOR’s management had unanimously committed to resign in the event of a successful acquisition bid, and accused the Board of using renumeration payment as an ‘anti-takeover policy’ to avoid considering a deal.

Kessler has dismissed Berjal’s claims as “baseless, false and misleading,” while SCOR has expressed its commitment to continue creating value for its long-term shareholders following the rejected deal.

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