BMO Capital Downgrades PartnerRe (PRE) to Market Perform

BMO Capital downgraded PartnerRe (NYSE: PRE) from Outperform to Market Perform with a price target of $130.00 (from $122.00).

Analyst Charles Sebaski commented, "On Tuesday, Exor S.p.A., a European investment firm, made a $130 per share all cash offer for PartnerRe, which corresponded to an approximately 16% premium to the merger terms with AXIS Capital. When we upgraded PartnerRe to Outperform from Underperform on March 26, we cited the optionality of a new bidder stepping in to acquire PRE. Now that this has happened and the stock price has reflected this higher offer, we are moving to a Market Perform rating."

The analyst added, "We have had many discussions with investors wanting to know if AXIS will up its bid for PRE and possibly start a bidding war with Exor; however, we do not see that as a likely outcome for several reasons despite our belief that the PartnerRe board would prefer the AXIS deal. The main reasons we do not expect AXIS to up its bid are: 1) dilutive - to beat the Exor offer of $130 AXIS would likely need to dilute its shareholders by over 10%; 2) break-up fee – right now it seems that the PRE board would likely need to recommend the Exor deal, entitling AXIS to a $250 million break-up fee, but if AXIS offered a higher, but “under” bid, then PRE might still recommend the AXIS deal and AXIS would be entitled to only a $55mm breakup fee if it were voted down; and 3) desperation - if AXIS starts chasing a deal that initially chased it, there is risk that AXIS itself would start to look as if it needs to do something."

For an analyst ratings summary and ratings history on PartnerRe click here. For more ratings news on PartnerRe click here.

Shares of PartnerRe closed at $129.66 yesterday.

You May Also Be Interested In

• H.C. Wainwright Downgrades Sanara MedTech (SMTI) to Neutral
• Quad/Graphics (QUAD) PT Raised to $13 at Benchmark
• Equinix (EQIX) PT Raised to $1,211 at Cantor Fitzgerald Following Strong Results