Swiss reinsurer Converium Holding AG urges shareholders reject SCOR's takeover offer

Swiss reinsurer Converium Holding AG said Friday that it urged shareholders to reject a hostile takeover from French rival SCOR SA was for the reason of risk to loose up to US$800 million ( EUR594.4 million) in business

"Converium's board of directors urges its shareholders to reject SCOR's offer, believing it to fundamentally undervalue the company's franchise and growth prospects," Converium said in a statement.

SCOR earlier this month offered to buy rival Converium in a deal that values the entire Swiss company at about US$2.56 billion (EUR1.9 billion).

The offer, which was officially published in the Swiss press, matches an unofficial notification of interest SCOR issued in February when it said it would offer 21.25 Swiss francs (US$17.42; EUR12.95) per Converium share.

SCOR, which already owns more than 32 percent of the Swiss company's shares, said it would set a deadline of May 22 to acquire at least 50 percent plus one Converium shares.

Converium shares added 0.9 percent to 22.3 Swiss francs (US$18.29; EUR13.59) in Zurich.

Reinsurers sell backup insurance to other insurance companies, spreading risk so that enormous losses can be covered.