(Bloomberg) -- PartnerRe Ltd. is betting the value of a mergerwith Axis Capital Holdings Ltd. is worth more in the long run thanan extra few dollars a share now. Shareholders may not agree.

The Bermuda-based reinsurer on Monday chose a sweetenedagreement with Axis -- valuing PartnerRe at about $126 a share,according to analysts -- over a $130 cash bid from Exor SpA. Thenew terms with Axis include an $11.50-a-share one-time specialdividend to supplement what had been an all-stock transaction.

PartnerRe says the gap between the two proposals isn’t as wideas it seems because the combination with Axis will create a muchstronger entity that can better compete in an overcrowdedreinsurance market. Exor, the investment fund controlled by Italy’sAgnelli family and known for its stake in carmaker Fiat ChryslerAutomobiles NV, doesn’t have significant reinsurance operations soit can’t offer the same synergies.

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