Australia and New Zealand based insurer Suncorp Group is trying to seal its acquisition of the remaining shares in Tower Insurance of New Zealand with an increased bid.
Back in February, Prem Watsa’s Fairfax Financial made an all cash offer at $1.17 per share, so valuing Tower at $197 million, which was a 48% premium to the Tower share price at the time.
Suncorp responded a week later, as its subsidiary Vero Insurance New Zealand Limited acquired 11.14% of the ordinary shares in Tower, and took a position in the market to take up to 19.9% of the shares in Tower.
At the time, Vero also made a non-binding proposal to acquire the remaining 88.86% of ordinary shares at a price of NZ$1.30 per share, which was above the price offered by Fairfax.
Suncorp said today that following the completion of a successful due diligence, its subsidiary Vero NZ has revised its offer and that Tower shareholders would now receive cash consideration of NZ$1.40 for each share held.
Suncorp New Zealand (SNZ) CEO Paul Smeaton said that bringing Tower into the firm would help strengthen its strategic position in a competitive marketplace.
Smeaton commented; “There is strong strategic rationale for combining the businesses of Suncorp New Zealand and Tower. This transaction supports our vision to be the number one choice for New Zealanders and our strategy to connect New Zealanders to valuable products, services and experiences that enhance and protect their financial wellbeing.
“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.
“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.”
Fairfax had not responded to Suncorp’s first bid, so it will be interesting to see whether Prem Watsa’s firm makes any statement regarding its proposed acquisition of Tower in the wake of this increased offer.
