Reinsurance News

SCOR should not accept offer below €50 per share, says Amber Capital investor

1st October 2018 - Author: Matt Sheehan

Joseph Oughourlian, Founder and Managing Partner of long-time SCOR investor Amber Capital, has told the Financial Times that he believes SCOR was right to reject Covéa’s €8.2 billion (US $9.6 billion) acquisition bid, which valued SCOR’s shares at €43 per share.

SCOR logoOughourlian, whose company has been an investor in Scor for the past 15 years, said that SCOR should stand its ground and only consider an offer that prices its shares above €50.

“The price at €43 seems very low to me. There’s no premium for control,” Oughourlian told the Financial Times. “The reaction of Denis and the board is the right one. I wouldn’t even open the door.”

The news will offer welcome support to SCOR’s Chief Executive Officer (CEO) Denis Kessler, who has come under fire from activist investors such as French investment fund CIAM for refusing to engage in further negotiations with Covéa.

SCOR originally rejected Covéa’s offer on the grounds that it did not reflect the value of the company, adding that a merger deal was “fundamentally incompatible with SCOR’s strategy of independence” and would “jeopardize the Group’s strong value-creating strategy.”

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“On the industrial fit, no one supported it,” Kessler told the Financial Times. “There was absolutely no industrial project, no synergies … The financial part of the deal was not really attractive to say the least.”

The reinsurer also held a recent meeting to reaffirm its decision in light of the mounting pressure from investors, and has requested that Thierry Derez, CEO of Covéa, permanently resign from SCOR’s Board of Directors.

“For me and Scor, each board member must be loyal,” Kessler said regarding Derez’s removal. “Loyalty is absolutely important for me.”

However, Catherine Berjal, President of CIAM, has said that SCOR’s management could be held legally liable for “a decision which would constitute gross management negligence,” and has requested that Kessler detail his proposals to raise SCOR’s share price above the value offered by Covéa.

In a second letter, Berjal 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.

Covéa, which holds an 8.2% stake in SCOR and has been its largest shareholder since April 2016, has 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.’

The firm added that it intends to comply with a commitment, made in April 2016, not to increase its shareholding in SCOR beyond the threshold of 10% for a period of three years.

However, Kessler told the Financial Times that he did not expect an offer next year to be any more attractive: “Is it going to change in six months? The answer is no, there will be no more reason to say it is fantastic,” he said.

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