PartnerRe said on May 4 that it favored an all-share merger with Axis, which would create the world’s fifth-largest property-and-casualty reinsurer. The combination would help Bermuda-based Axis compete with larger rivals like Warren Buffett’s Berkshire Hathaway Inc., Munich Re and Swiss Re AG. PartnerRe’s investors now have a sweeter cash option.

Hard to Match

The revised offer “seems to be at a level that will be very hard for Axis to get close enough to keep Exor from winning,” Charles Sebaski, an analyst at BMO Capital Markets, said by e-mail. Representatives for PartnerRe and Axis weren’t immediately available for comment.

PartnerRe rose 1.9% to $136 at 7:57 a.m. in early trading in New York. Exor fell as much as 2.2% in Milan trading, paring its gains this year to 22% and valuing the company at 10.3 billion euros ($11.6 billion).

In an effort to seal the deal, Exor has offered PartnerRe a signed merger agreement that can be executed upon termination of the deal with Axis. The Italian investor has also filed proxy materials that allow investors to vote against the rival offer at an upcoming shareholders meeting.

‘Good Complement’

The new offer “takes into account better results than expected” as well as the board’s opposition to the initial offer, Elkann said in the interview.

Under the Axis agreement, PartnerRe shareholders would get about 51.5% of the combined company. A revised deal, made after Exor’s April 14 offer, also gives PartnerRe investors a special dividend of $11.50 per share. That gives PartnerRe holders about $126 a share based on Axis’s May 1 closing price of $52.33.

Mergers and acquisitions are accelerating in the insurance business as companies seek to gain scale amid pressure from pension and hedge funds that have been increasing bets on weather-related risks. Axis, which provides coverage in the energy, marine and aviation industries, has highlighted potential cost savings of a merger. Elkann has said there could be less disruption if Exor takes over.

The Agnellis are one of the world’s wealthiest families. Their 51% stake in publicly listed Exor is valued at about $6 billion. Elkann, who took the helm of the family’s investments in 2004, has been seeking to balance out the family’s reliance on car and truck markets and has been raising funds for the purpose. In addition to the Cushman & Wakefield deal, Exor sold product-testing company SGS SA for 2 billion euros in 2013.

The PartnerRe would give Exor “a broader scope of activities,” said Elkann. The deal would be “a good complement” to capital-intensive industrial businesses like Fiat and truck and tractor maker CNH Industrial NV.

--With assistance from Flavia Rotondi in Rome.

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