PartnerRe, a reinsurance company, said Sunday it had agreed to buy a smaller European competitor, Paris Re, in an all-stock deal valued at $2 billion.

The deal will add about $1.4 billion of gross written premiums to PartnerRe, which is based in Bermuda. The merged company will have nearly 1,400 employees and nearly $23 billion in total assets.
Under the terms of the deal, PartnerRe will purchase a 57 percent stake in Paris Re, paying 0.3 of its shares for every Paris Re share, or $19.38 at PartnerRe’s closing price of $64.60 on Friday. PartnerRe in recent weeks had already acquired a 6 percent stake in Paris Re.
Paris Re closed Friday at 12.30 euros ($17.20) a share.
That portion of the deal will essentially buy out Paris Re’s private equity investors, who formed the company in 2006 by acquiring AXA’s reinsurance business. The buyout firms, including Stone Point Capital and Hellman & Friedman, took Paris Re public on Euronext in 2007.
Before that part of the deal closes, expected sometime in the fourth quarter, Paris Re will distribute $310 million in cash to its shareholders. Afterward, PartnerRe will begin a tender offer for the remaining Paris Re shares at the same price.
PartnerRe first began exploring a deal with Paris Re last year, Patrick Thiele, PartnerRe’s chief executive, said on Sunday. PartnerRe had been seeking to increase its assets to provide a buffer against potential shocks in the insurance sector, and Paris Re’s clean balance sheet and focus on reinsurance made it an attractive target, he said.
“We think this acquisition secures our future for some time, no matter what the environment will be in the next year or two,” Mr. Thiele said.
(Source: The NYT)