PartnerRe moves to shareholder vote on Axis merger

* Exor says will not sweeten latest $6.8 bln offer

* PartnerRe (NYSE: PRE - news) says Exor's offer price is "unacceptable"

* Exor says confident its bid will prevail (Adds Exor statement, Sandell Asset Mgmt comments)

By Agnieszka Flak and Mike Stone

MILAN/NEW YORK, May 22 (Reuters) - Bermuda-based reinsurer PartnerRe will ask its shareholders to vote on a merger with Axis Capital Holdings agreed in January, after rival bidder Exor refused to further sweeten its $6.8 billion offer.

Exor, the investment vehicle of Italy's Agnelli family, said on Thursday it would not raise its latest offer but was willing to negotiate with the reinsurer if its board declared its bid superior to that of Axis (Stockholm: AXIS.ST - news) .

PartnerRe reiterated in a statement on Friday and a letter to Exor's board that the price and terms of the Italian company's offer were unacceptable.

"(Exor's) offer is an attempt to acquire PartnerRe at an opportunistic point in the reinsurance cycle and at an inadequate valuation that does not appropriately reflect the strength of PartnerRe's balance sheet and franchise value," the reinsurer said in the letter.

Reinsurers, which help insurers pay large damage claims in exchange for part of the profit, are being squeezed by price competition and weak demand from insurers.

Exor has become PartnerRe's largest shareholder after acquiring a stake of 9.9 percent, a move the reinsurer said was a "coercive attempt to further its opportunistic acquisition at the expense of PartnerRe's long-term shareholders".

PartnerRe said its board continued to support a combination with Axis. PartnerRe has so far argued the merger of equals, meant to create one of the world's largest reinsurers, provided better synergies and more upside longer term.

"PartnerRe will now proceed to shareholder approval of the transaction with Axis," it said. A date for that shareholder meeting has yet to be set.

Exor welcomed PartnerRe's decision to allow investors to vote on the matter, saying it was confident its binding all-cash offer of $137.50 per share "will ultimately prevail as it provides superior value and certainty".

Exor has previously filed material with U.S. market regulator SEC (Shanghai: 603988.SS - news) to allow it to solicit PartnerRe investors to vote against the Axis deal should its own offer be spurned.

Franklin Mutual Advisers LLC, one of PartnerRe's top-five shareholders, told Reuters earlier in May that Exor's latest offer was "clearly superior" to the Axis deal. Meanwhile, Axis is not considering improving its own offer, a person familiar with the matter told Reuters on Sunday.

In a letter to PartnerRe's chairman, shareholder Sandell Asset Management asked the board to acknowledge Exor's offer as likely being the superior one. Sandell owns less than 1 percent of PartnerRe, according to a person familiar with the asset manager.

Sandell questioned the board's commitment to a fair process and said the latter should act in the interest of shareholders.

Exor shares closed up 0.3 percent, while shares in PartnerRe were down 0.3 percent by 1804 GMT. (Editing by Keith Weir and Mark Potter)