Merger heads to High Court
25 Aug 2017
Suncorp has lodged an appeal over its denied bid to acquire Tower through its Vero brand.
The firm has lodged the appeal via its wholly owned subsidiary, Vero New Zealand, after the Commerce Commission refused to grant permission for a merger between New Zealand’s second and third largest personal lines insurers.
“Vero insurance New Zealand has lodged an appeal with the High Court of New Zealand on the New Zealand Commerce Commission’s decision to decline its application to acquire Tower Limited,” the insurer told the ASX.
In its rationale for denying the deal, the Commerce Commission said it feared the merger of the two businesses would reduce competition in the market and could see “coordinated effects,” in both pricing and product quality, impact consumers.
Tower has said that it will “fully support Vero with its appeal.”
“Tower also intends to file its own cross-appeal within the coming weeks,” the firm told the ASX.
Tower noted that Vero wants its appeal heard before the end of the 2017 calendar year as the target insurer “supports a prompt resolution of the matter.”
“In the meantime, the Tower Board continues to consider a capital raise to ensure prudent management of the balance sheet and accelerate the transformation of the business,” it said.
- Insurance Business