U.S. News

Converium Drops Opposition Against Scor Takeover

Swiss reinsurer Converium said Thursday it was dropping its months-long opposition to a takeover by Scor because the French company had improved its offer enough to recommend shareholder acceptance.

Converium said Scor was now offering 23.2 Swiss francs ($19.06) a share.

"Converium's Board of Directors unanimously welcomes today's revised offer from Scor," a company statement said. "The board therefore recommends that shareholders accept the improved offer."

It said Scor had increased to 5.5 francs ($4.52) a share the cash it was offering in addition to the exchange of each Converium share for 0.5 new Scor shares.

Scor also foresees leaving the offer unreduced by Converium's proposed gross dividend of 0.2 francs ($0.16) per Converium share, the Swiss company said.

Previously the offer was 0.5 new Scor shares plus 4 francs in cash. Based on the closing price of Scor shares on Euronext Paris on Wednesday, the offer price values each Converium share at CHF23.2, Converium said.

"The increase in the offer price represents a significant improvement in the consideration offered to our shareholders," said Markus Dennler, chairman of Converium's Board of Directors. "The offer price recognizes our remarkable turnaround of the past two years. It further reflects the exceptional quality of our staff, long-standing client relationships and excellent growth prospects supported by a strong capital position."

Scor, France's largest reinsurer, said in February that it had bought 32.9% of the Swiss company's shares and indicated it would launch a public tender offer at a later date. Converium rejected the move at the time.

Converium said last month that its net profit for the first quarter tripled because of the release of tax allowances. The company earned $150.9 million, compared with $50 million in the first quarter of 2006.

The main reason was the release of a tax valuation allowance worth $85.2 million, which helped Converium offset a $44.6 million charge for winter storm Cyril, which hit Europe in January with winds over 80 mph and heavy downpours, killing at least 48 people and disrupting travel for tens of thousands.

Reinsurance companies sell backup coverage to other insurers, spreading risk so the system can handle huge losses from major disasters.