Agnellis May Boost Cash Pile by $12 Billion With Latest Deals

(Bloomberg) --

Exor NV rose to a record high after the Agnelli family holding began exclusive talks to sell its PartnerRe reinsurance unit to France’s Covea for about $9 billion in cash.

Shares in Exor, which also controls Fiat Chrysler Automobiles NV and Ferrari NV, rose as much as 6% in Milan to trade at 74.2 euros, giving the holding a market value of 17.9 billion euros ($19.6 billion).

Exor and Covea on Sunday confirmed that they’ve entered exclusive discussions, after the talks were first reported by Bloomberg. Covea approached the Agnellis with an unsolicited $9 billion offer for the Bermuda-based reinsurer, people familiar with the situation said.

Exor, led by Agnelli scion John Elkann -- who’s also chairman of Fiat and Ferrari -- agreed to buy PartnerRe in 2015 in a deal that valued the company at about $6.9 billion. That was part of a plan to diversify away from the capital-intensive auto industry.

A sale now would mark a significant gain for the Italian billionaire clan and and be another major deal for Elkann just months after Fiat Chrysler agreed to combine with PSA Group to create the world’s fourth-biggest carmaker.

Exor would boost its cash pile by about $12 billion with the two transactions -- based on Bloomberg calculations -- as it is set to receive nearly 30% of the 5.5 billion-euro special dividend Fiat will pay its investors in the PSA deal.

The possible sale of PartnerRe is also fueling speculation of more deals in the works.

“A disposal of PartnerRe would increase the M&A appeal on Exor on top of the Fiat-PSA deal and CNH Industrial’s spin-off plan,” Mediobanca analysts wrote in a note to clients. Exor owns 27% of CNH Industrial and 29% of Fiat Chrysler.

The Agnellis are one of Europe’s wealthiest dynasties with a combined fortune of more than $11 billion, according to the Bloomberg Billionaires Index. They own 53% of Exor through a separate holding company that takes its name from Fiat founder Giovanni Agnelli and pools together dozens of his descendants as its investors.

Agnellis May Boost Cash Pile by $12 Billion With Latest Deals

For Covea, buying PartnerRe would help diversify its business beyond auto, life, home and health insurance coverage.

Insurers and reinsurers are under pressure from low-to-negative interest rates at which they have to invest a large chunk of their premiums. Insurers have turned to deal-making and other strategies to diversify revenue streams, including moves into reinsurance and asset management.

If successful, the sale would be biggest deal in the industry since Axa SA bought XL in 2018 for $15.3 billion.

Covea abandoned efforts to buy French rival Scor in 2019, ending one of the country’s most acrimonious takeover attempts in recent years.

Reinsurers insure risks of primary insurers such as Covea and have themselves been subject to pricing pressure and consolidation in the industry.

©2020 Bloomberg L.P.

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