Regulator terminates Suncorp’s Tower bid

SUNCORP has been left holding a $30 million stake in New Zealand insurer Tower after that nation’s competition regulator blocked the Queensland company’s takeover bid.

The rejection up-ends a $225 million bid only one month after Suncorp expressed confidence “of the strong basis for approval” by NZ’s Commerce Commission.

But the commission yesterday outlined concern about Suncorp buying out Tower, which Credit Suisse analysts estimated had about 10 per cent of NZ’s personal insurance market.

“Without the competition that Tower provides, there is a real risk that consumers would end up paying higher prices for insurance cover while receiving lower quality, such as reduced insurance coverage,” NZ Commerce Commission chairman Mark Berry said.

Dr Berry said NZ had only three significant insurers, including Suncorp’s Vero and Sydney-based IAG. He said smaller insurance rivals would not represent the same level of competition as Tower. Suncorp could appeal, he said.

The move raises questions about Tower’s first predator, Canada’s Fairfax Financial, whom Suncorp outbid via a $NZ1.40 ($A1.32) a share offer.

Fairfax’s bid is no longer alive but it could theoretically look at another play. Suncorp had bought 19.9 per cent in Tower for its bid.

Suncorp said it was disappointed and did not believe buying Tower “would substantially lessen competition”.