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Exor


Fernando Palmer
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Hi Marko, thanks for your question. 

Exor, the biggest Italian company by market capitalization, is having a rough period lately. A move in the stock price that you are referring to took place after the proposed sale of the reinsurance business collapsed.

Exor was in talks with the French insurer Covea for a sale of the “PartnerRE” reinsurance business. Although these two reached an agreement on a $9 billion deal, Covea asked Exor to renegotiate the terms of the deal, which the Italian giant refused to do. Ultimately, Covea pulled out of the talks. 

“The news is undoubtedly negative. From a qualitative standpoint Exor shows that it does not need to sell and sends a clear message to those speculating on a possible revision of the merger with PSA terms, showing that it is not willing to change what agreed,” Equita SIM’s Martino De Ambroggi said.


As a result, shares of Exor dropped 10% last week. The bearish move was also boosted by the fact that Fiat Chrysler Automobiles NV - where Exor owns a controlling stake - decided to suspend dividends for 2019, a move that is likely to cost Exor around $340 million.

I suspect that Exor stock can trade in a positive fashion given the latest headlines concerning the giant. Therefore, I’d stay away from the stock for the time being.


 

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Why did Exor stock crash last week?

Exor N.V is a holding company specializing in investments. It covers sectors like; construction equipment, agricultural equipment, commercial vehicles, automotive industry, and reinsurance sector. Exor NV is a giant company in the investment business with goodwill at stake. Nobody would predict a change of event which is unfolding in their business line.

Reasons for Exor stock crash by 10%

Exor N.V, an Italian company, owned by the Agnelli family, is battling to boost its cash. The Exor stock crashed by 10%. This comes as a result of the backfiring of a deal to sell the PartnerRe reinsurance business at $ 9 billion to a French firm, Covea. The company's stock lost more than 50% of its value, due to the effects of the Coronavirus pandemic in Italy. Italy has experienced the worst effect of the pandemic.

Exor N.V shows clearly that it is not considering a sale anytime soon. The company argued that selling the firm below the agreed bid of $ 9 billion will take into account its value. The bidder did not indicate any uncertainty which may affect their terms and conditions. No one will agree to take chances. The bidder might be taking the best available excuse for revising their terms. The option for Exor N.V is to try the next available alternative.

The effects of CODIV-19 on the stock market

On the other hand, Covea states that it cannot take over Exor N.V at the earlier bid. They fear that the prevailing situation of the COVID-19 pandemic may continue hitting the economy. Agnelli family maintains they will not lower the price. Covea's fear is justifiable, but since it was not included in their agreement, it is not applicable. With the current coronavirus pandemic, stock markets have responded with alarming unpredictability. The market has dropped with large drops.

2008 Recession

The market was in submerge a decade ago in the year 2008. We have no assurance that we will not get back to this kind of scenario until the pandemic is over.

Coronavirus pandemic has created indeterminacy in the whole world. Investors are getting prepared in case of a recession. The uncertainty of how far it may spread is making investors and economists struggle to gauge the financial implications.

The two companies were planning a 50-50 merger. This is the biggest deal to collapse involving a European bidder. The effects of COVID-19 are hitting the economy terribly. Bidders are opting to cancel their sealed deals due to falling prices.

A possible merger between Exor N.V and Fiat Chrysler

As a result of Covea's withdrawal, Exor N.V will incur an extra cost. Fiat Chrysler, which is monitored by Exor N.V, has suspended 2019 dividends. For this reason, Exor may end up incurring an extra $ 340 million. The dividend may have saved the Exor Company a time like this when they are facing price dropdown. One of the Exor clan members, Elkann, is bargaining for another merger with Fiat Chrysler. Nevertheless, Exor N.V has hope that they will pick the pieces and stand again. 

Its outlook

 

 image.png.638d790b4c2cd7a7e24672470829b408.png

 

 

 

 

 

 

Exor stock analysis

The negative news concerning the Exor N.V has resulted in their shares fall by 10%. For more than seven weeks, they are trading as low as 41.

 

Current trading price is Euro/USD 49.18 +1.71 (+1.47%)

 

Final statement

The stock of Exor N.V was on a crash last week as a result of Covea pulling out of the merger deal. Exor lost more than 50% of their esteem.

Edited by EXPERT'S ADVICE
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