Suncorp raises takeover bid for NZ insurer Tower

Suncorp has made an improved $A227.2m offer for insurer Tower as it tries to strengthen its position in NZ.

Raising the Tower bid: Suncorp CEO Michael Cameron Pic: Hollie Adams

Suncorp Group has sweetened a takeover offer for New Zealand insurer Tower, valuing the smaller company at about $NZ236.1 million ($A227.2m) in an effort to strengthen its position in the competitive New Zealand insurance market.

The Australian insurer and regional bank (SUN) said it would offer $NZ1.40 cash a share after completing due diligence on its target.

Suncorp in February trumped a $NZ1.17 a share bid from Canada’s Fairfax Financial Holdings, offering $NZ1.30 and acquiring an initial 11.1 per cent stake in Tower. It lifted that to 19.9 per cent by mid-March, although it paid $NZ1.40 each for the subsequent shares.

“There is strong strategic rationale for combining the businesses of Suncorp New Zealand and Tower,” Paul Smeaton, chief executive of Suncorp’s New Zealand arm, said.

Tower said it was assessing the revised proposal but was for now making no recommendation on the merits of a deal. Its New Zealand and Australian shares were placed in a trading halt today.

Suncorp previously said a merger of the companies would consolidate its position in New Zealand’s general insurance market by creating a business with gross written premiums of $NZ1.6 billion and generating value through reduced costs.

Suncorp’s bid remains subject to approval by Tower’s board, and from New Zealand’s central bank and Commerce Commission. It has already received New Zealand Overseas Investment Act consent, Tower said.

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