Converium urges shareholders to reject hostile Scor bid UPDATE

Converium urges shareholders to reject hostile Scor bid UPDATE

	Published : Fri, 13 Apr 2007 07:55 By : Agencies Print this Story

(Updating with more details, new date for Q1 results release, background)

ZURICH (Thomson Financial) - Converium Holding AG has urged its shareholders to reject Scor SA'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 mln usd.

Converium said it believes the offer impairs its growth prospects and it anticipates significant business, integration and execution risks 'arising from the hostility of Scor's offer'.

'The hostile nature of the bid threatens to destroy value for Converium's stakeholders and to undermine the stability of SCOR's shares, the bulk of its acquisition currency,' Converium said.

Converium also announced that it is bringing forward the release of first quarter results to April 19, 2007, from May 8.

In the offer, which was published last week, Scor is offering half of one of its shares plus 4 sfr in cash per Converium share, unchanged from its preliminary offer.

Scor aims to acquire the 67.1 pct it doesn't already own in its Swiss rival.

Pending Converium's board's official report -- which will be published after trading today -- the insurer had urged its shareholders to defer from making a decision. The Swiss reinsurer had previously rejected Scor's offer.

Earlier this week, Converium announced plans to return cash to shareholders by cutting the par value of its registered shares in half, from 5.00 sfr to 2.50 sfr.

Commenting on today's official board report, chairman Markus Dennler said: 'We urge our shareholders to place their confidence in our management's detailed and credible plan for sustainable future value creation.'

Dennler also said that Converium's stand alone forecasts for shareholder returns outstrip Scor's for the combined business.

The Scor offer does not fully reflect the long-term value of Converium's 'strategic road map' announced on Feb 28, which is expected to generate a sustainable return on equity of 14 pct by 2009, a long-term shareholder value in excess of Scor's offer price.

The recent S&P upgrade of the company's long-term financial strength rating to 'A-' confirms the low execution risks relating to its stand-alone strategy, Converium said.

Additionally, Scor's offer price represents only a 12.3 pct premium compared with the closing stock market price of Converium's shares on Feb 16, the day preceding the announcement by SCOR of its acquisition of its 32.9 pct Converium stake.

Moreover, Converium warned that most reinsurance contracts contain change in control provisions that might successfully be enforced upon the consummation of the offer, citing the example of its major strategic alliances with Global Aerospace Underwriting Managers Ltd (GAUM) and the Medical Defence Union (MDU).

Converium also said that the offer carries significant business risks, such as triggering customers who want to diversify their reinsurance policies to defect.

Furthermore, Converium criticised that Scor anticipates growing the combined entity's book of business at a lower growth rate than that of Converium on a standalone basis.

SCOR anticipates that the combined entity will grow at a rate of 7 pct per year, while Converium believes that it would grow as a standalone entity at a rate of 17 pct.

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