By Agnieszka Flak and Mike Stone
MILAN/NEW YORK (Reuters) - Italian holding company Exor (MI:EXOR) has raised its all-cash offer for Bermuda-based reinsurer PartnerRe (N:PRE) by 5.8 percent to $137.5 (£87.76) per share after its previous attempt to trump a bid by Axis Capital Holdings (N:AXS) was rejected.
Exor, the investment vehicle of the Agnelli family, said in a statement on Tuesday the new offer values PartnerRe at $6.8 billion (£4.3 billion) and represents a 10 percent premium to the implied value under the Axis agreement.
Axis and PartnerRe agreed in January to create one of the world's largest reinsurers and sweetened the deal last week by including a one-off cash dividend.
Exor, PartnerRe's largest shareholder with a 9.32 percent stake, repeated that it considered its proposal superior.
"Unlike Axis, we have no intention of materially changing PartnerRe's business operations, corporate structure or
key management and employees," Exor boss John Elkann, a scion of the Agnelli family, said in his offer letter.
PartnerRe and Axis declined to comment.
Exor, which also controls carmaker Fiat Chrysler Automobiles (MI:FCHA), has been keen to branch out into the financial services sector with its steadier and higher returns.
PartnerRe last week rejected Exor's earlier proposal, saying it undervalued the company, adding it was not a good time to sell due to insurers' low valuations.
Reinsurers, who help insurers pay large damage claims in exchange for part of the profit, are being squeezed by price competition and weak demand from insurers.
People familiar with Axis' thinking said they thought Exor was offering to pay for PartnerRe at book value, below the valuations typical for deals in the reinsurance industry, adding the merger of equals between Axis and PartnerRe promised a stronger combined entity in the longer term.
However, Axis "may be limited in its ability to sweeten its offer," Clifford Gallant, an analyst at Nomura, said in a note.
"Led by Exor, PartnerRe's largest owner, shareholders may attempt to force the board to accept the bird in the hand."
Exor said it had filed material with U.S. market regulator SEC to allow it to solicit PartnerRe investors to vote against the Axis transaction should its own offer be spurned again.
In April, PartnerRe's second biggest shareholder told Reuters that Exor's initial offer was "much superior" to the deal with Axis.
Shares in Exor were down 1.6 percent at 41.7 euros by 1342 GMT, compared with a 0.7 percent fall in Milan's blue-chip index (FTMIB). PartnerRe shares were up 1.8 percent at $135.8.
(Additional reportng by Avik Das and Richa Naidu in Bangalore; Editing by Janet Lawrence) OLGBBUS Reuters UK Online Report Business News 20150512T120559+0000