Converium Holdings has issued an appeal to Scor shareholders urging them to vote against the French insurer's capital increase at its AGM on Apr 26, thereby blocking the takeover bid for Converium.
In a full-page advertisement in French business daily Les Echos, Converium's board of directors said Scor shareholders "do not have all the information necessary to weigh up the advantages and disadvantages of the proposed merger," and should therefore oppose the capital increase that would enable Scor to move ahead with its plans to acquire the 67.1% it does not already own in its Swiss rival.
The board said the bid presents major execution and integration risks which will be "detrimental to the growth prospects of the new structure and to the value of Scor shares." Converium went even further in the statement, saying a hostile takeover will lead to a loss of customers and key staff at both companies, and undermine Converium's joint ventures with Global Aerospace Underwriting Managers, and Medical Defence Union, leading to a loss of business.
It also questioned the logic behind the merger saying "the projected cost savings are extremely optimistic given the execution risks involved," adding that Converium risks losing one of its major advantages "the beneficial fiscal environment (it) enjoys in Switzerland." Earlier this week, Converium urged its own shareholders to reject Scor's takeover offer, saying the French group's hostile bid fundamentally undervalues the company and could result in a loss of business of up to $800 million.
In the offer, published in Swiss newspapers earlier this month, Scor is offering half of one of its shares plus 4 Swiss Francs in cash per Converium share, unchanged from its preliminary offer.