Tower shares in trading halt while board weighs up new Vero offer

The Tower board of directors will further update the market as quickly as possible. Michael Stiassny, Tower chairman

Tower shares are in a trading halt as the general insurer’s board goes through the detail of an improved 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 was “fully assessing the proposal with its advisers” and that trading in the shares had been halted while it evaluates the deal.

The Australian insurer started buying Tower shares in February before announcing its takeover tilt, offering a price that trumped a scheme of arrangement with Canada’s Fairfax Financial Holdings at $1.17 a share, valuing the insurer at $197.3m, that initially won the blessing of shareholders Salt Funds Management and Accident Compensation Corp. The Vero bid needs antitrust approval by the Commerce Commission which is due at the end of the week.

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

Tower’s board had unanimously backed the Fairfax Financial deal before the Suncorp offer emerged and has since held off from making a recommendation, saying it’s still considering both options.

The insurer has planned to carve out claims from the Canterbury earthquake into a separate entity as the cost from the South Island disaster six years ago has continued to escalate.

The NZX-listed insurer’s shares last traded at $1.155 and have gained 38 per cent this year. That values Tower at $194.8m.