By Inti Landauro and Gilles Guillaume
PARIS, Sept 4 – Shares of French re-insurer Scor surged on Tuesday after its board turned down a friendly takeover offer from privately held insurance company Covea, with investors anticipating that a higher bid would materialise.
Covea, which already owns an 8.2 percent stake in Scor, said in a statement that it had withdrawn its offer to pay 43 euros ($49.85) per Scor share, which valued the company at around 8.21 billion euros, but added it remained interested in buying the re-insurer in a friendly operation.
Scor confirmed in a statement that it had turned down the Covea offer saying the price offered didn’t reflect the intrinsec or strategic value of the company.
Investor expectations that a higher offer would be made for Scor, either by Covea or another bidder, pushed the re-insurer’s share price up 8.4 percent to 38.42 euros. The cash offer for Scor represented a 21 percent premium over its Sept. 3 closing price.
“We believe that Scor should command a higher premium and we support management’s rejection of the offer,” said brokerage Jefferies in a note to investors.
Given market multiples and recent assets bought by Scor, Jefferies said it considered 45-46 euros an appropriate price.
If Covea succeeds in acquiring Scor it would create a major player in the European insurance market capable of swallowing smaller rivals as the industry consolidates.
Covea first bought a stake in Scor in 2003 and raised it to its current level in April 2016.
Covea said on Tuesday it could finance the acquisition with cash and financing through Barclays and Credit Suisse.
($1 = 0.8626 euros) (Reporting by Inti Landauro and Gilles Guillaume; editing by Richard Lough and Kirsten Donovan)