Investor pressures SCOR on Covéa takeover

An activist investment fund is putting pressure on French reinsurer SCOR’s management after it rejected a friendly €8.2 billion takeover offer by French cooperative insurer Covéa in late August 2018, according to a Reuters report.

French activist investment fund CIAM asked SCOR’s CEO Denis Kessler to engage in talks with Covéa regarding the takeover offer and threatened legal action, according to the report.

SCOR has confirmed that on Aug. 24, 2018, Covéa sent a letter to SCOR proposing to initiate discussions relating to a project which would see Covéa acquiring a majority stake in SCOR's share capital and voting rights.

On Aug. 30, 2018, SCOR's board of directors reviewed the terms and conditions of this unsolicited proposal in detail and determined that it is fundamentally incompatible with SCOR's strategy of independence, which is a key factor of its development, that it would jeopardize the group's strong value-creating strategy and that it reflects neither the intrinsic value nor the strategic value of SCOR. The proposal was met with unanimous opposition from SCOR's executive committee. In view of this, any public bid would be deemed hostile.

The board of directors of SCOR unanimously decided to refuse to initiate discussions with Covéa. It has reaffirmed its complete trust in SCOR's management to continue to create value.

SCOR therefore “reaffirms its independence and acknowledges Covéa's decision to withdraw its proposal on a potential combination,” according to an official statement.

The CIAM move supports Covéa, which already owns about 8.5 percent of SCOR, in its takeover bid as it shows some minority shareholders disagree with the management’s position and would be ready to sell.

CIAM’s president, Catherine Bejral, said in its letter to SCOR that the management was legally obliged to talk to 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 added.

CIAM holds 0.77 percent in SCOR.

According to the Financial Times, Ian Kelly, SCOR’s head of investor relations, said CIAM intended to make a short-term profit out of the situation. “We deem this unacceptable,” he told the newspaper.

Covéa is rumoured to be working on a new approach to its planned takeover of the reinsurer.

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