PartnerRe disclosed that holders of its preferred shares will get a $42.7 million cash payment – one of the final steps needed when Italian investment firm EXOR acquires it in a $6.9 billion deal.

The Bermuda-based reinsurer said the the payment equals $1.25 per preferred share, and it will come through once the merger deal closes in the 2016 first quarter.

As M&A deals meander toward conclusion, sometimes some tweaks must be made. That happened in this case.

Previously, EXOR disclosed enhanced terms for PartnerRe’s preferred shares, done through an exchange offer, amounting to a 100 basis point increase in the current dividend rate and an extended redemption rate. The thing is, this was contingent upon a private letter ruling from the U.S. International Revenue Service, issued to PartnerRe, as to the tax shelter reporting obligations for enhanced preferred shares.

On Feb. 16, the IRS said it would not grant such a ruling, which means that the $42.7 million cash payment will take place instead. Once the deal closes, PartnerRe said it will use “commercially reasonable” efforts to launch an exchange offer as per the merger agreement, where existing preferred shares could be exchanged for new preferred shares with an extended redemption rate.

PartnerRe’s shareholders approved EXOR’s planned acquisition in November. ParterRe originally announced in January 2015 that it would merge with rival AXIS Capital Holdings, but EXOR stepped in with its rival bid last spring. After some back-and-forth and two EXOR counter bids, the PartnerRe/EXOR deal became reality.

Source: PartnerRe