Tower trading halt as bid increased

Tower shares are in a trading halt as the general insurer's board goes through the detail of an increased takeover bid from ASX-listed Suncorp Group's Vero Insurance New Zealand unit.

Vero, which has built up a 19.9 per cent stake in its rival, is offering $1.40 a share to take over Tower, valuing it at $236.1 million, up from an earlier price of $1.30 a share, or $219.3m. Tower chairman Michael Stiassny said the board is "fully assessing the proposal with its advisers" and that trading in the shares have been halted while it evaluates the deal.

The bid has topped a $NZ1.17 ($1.12) offer from Canadian financial group Fairfax.

Suncorp New Zealand CEO Paul Smeaton says there is a strong strategic rationale for combining the two businesses.

“We strongly believe in the compelling benefits of the acquisition and the significant value that would be created for Suncorp shareholders and benefits to market competition,” he said.

“We are also committed to protecting Tower’s unique strengths through complementary multi-brand distribution and offering Tower’s customers access to a broader range of products and services.”

The insurer is awaiting approval for the bid from New Zealand’s Commerce Commission, which in March released a statement of preliminary issues for further inquiry.

Suncorp says its Vero New Zealand subsidiary continues to work closely with the commission and is confident there is a strong basis for approval.

An acquisition also requires Reserve Bank of New Zealand clearance.

“The Tower board of directors will further update the market as quickly as possible,” Chairman Michael Stiassny said. “In the meantime, the Tower board make no recommendation in respect of the merits of the Vero proposal.”

Tower has so far recommended the Fairfax offer, which requires a shareholder vote, while waiting for Suncorp to firm up its proposal.

 - NZ Herald, insuranceNEWS