Italian investment company Exor has triumphed in the battle for Partner Re, announcing it will acquire the Bermuda-based reinsurer for $US6.9 billion ($9.33 billion) in cash.

PartnerRe will walk away from a previous merger agreement with Axis Capital Holdings and pay a $US315 million ($426.13 million) termination fee. PartnerRe shareholders and regulators must approve the deal, which is due to close by the first quarter of next year.

Axis and PartnerRe agreed to merge in January, but Exor has aggressively pursued its target, making several offers.

Exor CEO John Elkann says the deal is positive for his company and PartnerRe.

“Under our stable and committed ownership, PartnerRe will continue to develop as a leading independent global reinsurer,” he said.

Exor will inherit PartnerRe’s third-party reinsurance capital management and insurance-linked investment activities, which include the Lorenz Re sidecar special purpose insurer, a catastrophe bond fund PartnerRe has operated since 2006 and some quota share activity with third-party investors.

Under the deal PartnerRe shareholders will receive $US140.50 ($190) a share in cash, including a special pre-closing dividend of $US3 ($4) a share.

If the transaction is not approved within a year, Exor will reimburse PartnerRe $US225 million ($304.34 million) of the termination fee it pays Axis.

The agreement includes a “go-shop” period during which the PartnerRe board can solicit and evaluate competing offers received before September 14.

Axis President and CEO Albert Benchimol says he is disappointed the merger collapsed, but “I have no doubt the best days for Axis Capital, our employees, clients, brokers and shareholders lie ahead”.

Ratings agencies have given the new deal a thumbs-down, with AM Best and Standard & Poor’s (S&P) both lowering ratings for Partner Re last week.

S&P, which revised its outlook on the reinsurer to negative from stable, says the Exor deal leaves PartnerRe with uncertainty about its future, including the management team, capital management, investment and growth strategies, and how it will manage risks.

AM Best says there are concerns over PartnerRe’s concentration in reinsurance and lack of a diversified product platform to provide both primary and reinsurance solutions.

It has downgraded PartnerRe from a financial strength rating of A+ (superior) to A (excellent), while its issuer credit ratings drop to a+ from aa-.