PARIS, Sept 18 (Reuters) - An activist investment fund on Tuesday put pressure on French reinsurer Scor’s management after it rejected a friendly 8.2 billion euro ($9.57 billion) takeover offer late last month.
French activist investment fund CIAM asked Scor’s Chief Executive Denis Kessler to engage in talks with French cooperative insurer Covea regarding the takeover offer and threatened legal action.
Kessler justified the decision to reject the offer saying Scor needed to remain independent and that the price did not reflect Scor’s “intrinsic or strategic” value.
The CIAM move supports Covea, 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. According to a source close to Covea, the firm is working on a new approach.
CIAM’s president, Catherine Bejral, said in its letter to Scor that the management was legally obliged to talk to Covea.
“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.
Since Covea offered to pay 43 euros per Scor share, a premium of about 20 percent, Bejral asked Kessler to detail his proposals to boost the share price above that level.
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.
A spokeswoman for Scor confirmed Kelly’s comments.
Covea, an increasingly assertive player on the French insurance market, hopes a Scor deal will make it a major actor on the European stage, where a process of consolidation is set to create more opportunities for acquisitions.
The insurer is bound by a 2016 covenant to submit any stake increase to the board for approval until at least April 2019 and says it plans to keep its word.
The fragmented nature of Scor’s ownership, with no one holding a larger stake than Covea, makes it a potential target for a hostile takeover.
$1 = 0.8571 euros Reporting by Inti Landauro Editing by Gareth Jones