Suncorp increases stake in New Zealand general insurer Tower
Australian financial services firm Suncorp has increased its stake in New Zealand general insurer Tower.
The company's interest in Tower has now reached 19.99% of shares for which it paid $1.40 per share so far.
Previously, the Australian insurer had 11.14% stake following an acquisition in Tower last month.
The additional stake was bought by Suncorp through its New Zealand subsidiary Vero Insurance from fund management company Perpetual.
It was purchased at a higher price compared to last month’s $1.30 per share bid made by Suncorp to acquire 100% of stake in Tower.
The offer from Suncorp had come after Canadian firm Fairfax Financial entered into a scheme implementation deal to acquire 100% stake in the New Zealand insurer at NZ$1.17 ($0.82) per share.
On 2 February, Fairfax announced that it would acquire Tower for approximately $144m.
Tower chairman Michael Stiassny informed shareholders that the board’s advice remained intact in spite of the latest development.
According to Stiassny, the board’s main focus is to optimise value for all the shareholders and for that, all options needed to be assessed carefully before issuing any recommendation.
Stiassny added: “While we are pleased to see Suncorp has recognised additional value in Tower for a minority of shareholders, it is unclear whether the $1.40 per share will be available for all Tower shareholders.
“We would expect all shareholders to benefit equally from a sale and will be asking Suncorp to advise whether it intends to employ differential pricing in its proposal.”
Stiassny concluded that Tower will seek clarifications about the “highly conditional nature” of Suncorp’s indicative scheme proposal.
Tower has also revealed that in spite of the new share deal done by Suncorp, it would continue to engage with Fairfax in connection with their scheme implementation deal and other transaction possibilities.
The New Zealand insurer also said that its insurance policies and the rights of policy holders will not be impacted, and will be retained by it irrespective of a change in its ownership.
Image: Suncorp increased its stake in Tower to 19.9%. Photo: courtesy of stockimages/Freedigitalphotos.net.