Suncorp (SUN) is expected to shortly reveal a rival offer for troubled NZ insurer, Tower (TWR) with a value of more than $NZ220 milion.
Tower chairman Michael Stiassny issued a statement Wednesday morning warning the company’s shareholders to be careful over the offer to buy their shares from insurer Brisbane-based Suncorp Group, which owns rival insurers such as AAMI, GIO, Vero Insurance, AIPA and Shannons, as well as Suncorp.
Tower’s board has already recommended shareholders accept a $NZ197 million offer from Canada’s Fairfax Financial Holdings at $NZ1.17 a share, and wants to fully review a rival bid before making a new recommendation.
Tower’s chairman said Suncorp had approached shareholders via investment bank, UBS, to buy up to 19.99% of the shares at $1.30 each, with a view to mounting a full takeover bid.
"The board’s primary focus remains to optimise value for our shareholders. In order to do so, we need to review and evaluate all options,” Stiassny said in a statement this morning. "We will update the market on any further material developments as the circumstances require."
The Fairfax Financial Holdings deal was announced on February 9 and won the backing of Salt Funds Management and Accident Compensation Corp, who collectively own 18% Tower.
The general insurer posted a loss of $22.3 million in the September 2016 year thanks to lingering claims from the Canterbury quakes in 2011 which are taking longer to settle.
Late last year Tower said it would put those claims into a separate company called RunOff, and suspended its annual dividend to preserve capital for the new company.
It said it was also weighing up funding options or finding partners to help with the split. Fairfax Financial ad Suncorp think the company is better buying now before any split (which might allow the shares in the so-called good company, become ore expensive). They can always continue with the run off idea once they have taken control.
Tower shares last traded at $NZ1.135, and have dropped 25% over the past 12 months. The fall was much steeper until the Fairfax Financial bid was revealed.
Suncorp said Wednesday morning it had built an 11.1% stake in Tower and Suncorp is remaining in the market to build that stake to 19.9%.
