Converium Sues SCOR In U.S. To Halt Takeover

Swiss reinsurer Converium, fighting a hostile takeover, announced today that it had filed a federal lawsuit against French reinsurer SCOR and the Swiss investment company Patinex.

The Zug-based company charged that the defendants violated U.S. securities laws. SCOR said it would fight the action.

SCOR has offered to buy Converium in a deal that values the entire company at about $2.56 billion. On Friday, Converium urged stockholders to reject the offer, saying it fundamentally undervalues the company's growth prospects.

Converium said its federal complaint alleges that SCOR unlawfully excluded Converium's U.S. shareholders from participating in SCOR's unsolicited tender offer, and failed to make proper disclosures when SCOR purchased Converium shares.

Its announcement did not state why it was including Patinex in the case. In February, when SCOR made its bid, Patinex sold almost 20 percent of Converium in shares and options.

Patinex is the investment vehicle of Swiss financier Martin Ebner who bought a 12.5 percent stake in Converium in 2005.

Converium said its U.S. shareholders hold approximately 22 percent of its outstanding shares.

Converium said it would seek a hearing on a motion for preliminary injunction prior to May 22--which, unless it is extended, is currently the last date on which Converium shareholders may tender shares in connection with SCOR's unsolicited tender offer.

The reinsurer added it would also seek an order enjoining SCOR from consummating the offer until SCOR and Patinex have complied U.S. legal obligations, including SCOR extending the offer to Converium's U.S. shareholders and American Depository Shareholders.

SCOR, in response to the suit, said it "has complied with all applicable legal and regulatory provisions in connection with its tender offer on Converium, and intends to defend itself vigorously against the unfounded allegations of Converium's top management."

Converium is a spinoff from Zurich Financial Services.