September 27, 2018 / 12:18 PM / 3 months ago

UPDATE 1-Insurer Covea still keen on friendly takeover of Scor after initial rebuff

* Covea says will respect covenant limiting stake in Scor

* Covea: would keep Scor listed

* Pressure mounts on Scor’s CEO Denis Kessler

* Scor shares flat, stock up around 20 pct in 2018

By Inti Landauro

PARIS, Sept 27 (Reuters) - French insurer Covea, whose 8.2 billion euro ($9.6 billion) bid for rival Scor was rejected this month, said it was still seeking a friendly takeover of Scor.

“Covea affirmed and reaffirmed its interest in talking about a friendly tie-up with Scor, aimed at building a large French insurance group with international scope in an evolving industry,” Covea said in a statement on Thursday.

Covea, which already owns about 8.5 percent of Scor, offered in late August to pay 43 euros per Scor share, valuing the company at about 8.2 billion euros ($9.6 billion).

However, Scor Chief Executive Denis Kessler rejected the offer as too low. Kessler has led Scor for 16 years and overseen a 340 percent surge in the share price since 2009.

Scor shares were up 0.1 percent at 40.35 euros in late session trading, with the stock up 20 percent so far in 2018.

Covea hopes a Scor deal will make it a major player in the European insurance industry, where signs of sector consolidation look set to create more takeover opportunities.

Recent deals have included Marsh & McLennan buying British company JLT for $5.7 billion, while AXA bought XL for around $15 billion.

Covea is bound by a 2016 covenant whereby if it wants to raise its stake in Scor to above 10 percent, it has to submit that proposal to its board for approval until at least April 2019. It said on Thursday that it will respect that covenant.

Covea confirmed it would plan to keep Scor listed after a takeover and said Scor would keep a “significant” number of independent board members and leave autonomy to its management.

Covea added that its chief executive Thierry Derez, who sits on Scor’s board, would temporarily withdrew from that position.

Activist investor fund CIAM last week said that Scor’s management had announced it would quit en masse in case of a takeover - something that Scor subsequently denied.

CIAM added it had asked Scor’s management to clarify its situation in the case of a takeover.

“We believe this saga could push Scor’s share price higher but we view Covea’s confirmation that a minority free float will be retained as negative for the share price outlook into the middle of next year,” wrote brokerage KBW in a research note.

$1 = 0.8548 euros Reporting by Inti Landauro; Editing by Sudip Kar-Gupta

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