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Fairfax looking to pick up an insurer in NZ


wisdom
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Tower is a challenged NZ insurer with a tarnished reputation post the Christchurch earthquake(s). The liabilities were so large that they had been trying to ring fence these losses. Seemed to me that this approach was a last attempt to get the company on sounder footing. The legalities of the ring fence were questionable, at best.

 

This announcement gives me pause on the Fairfax roll-up strategy.

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* Fairfax Financial to acquire Tower

 

* Deal for all cash offer of $1.17 per tower share, for an aggregate acquisition cost of $197 million

 

* Offer unanimously supported by tower board, in absence of a superior proposal

 

* Each tower director has undertaken to vote all tower shares in his control in favour of fairfax proposal

 

* Board also confirms that fairfax proposal does not impact tower insurance policies and rights of policy holders

 

* Two of tower's major shareholders, salt funds management and acc committed to vote in favour of fairfax proposal

 

* All figures in nz$ Source text for Eikon: Further company coverage:

 

NEXT IN MARKET NEWS

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  • 2 weeks later...

Looks like Suncorp is throwing their hat in the ring....

 

"Suncorp chief executive Michael Cameron has raided Tower’s share registry, as part of a potential new strategy of building up the bank’s life insurance business by carrying out some big name acquisitions.

 

The Queensland regional bank, through its Vero brand, is keen to buy 19.9 per cent of Tower, the New Zealand-listed insurance business, which is now the subject of a takeover tussle.

 

Canadian firm Fairfax Financial Holdings launched a $197 million bid for Tower earlier this month, which was supported by the board and major shareholders. But, in a surprise move, Suncorp commissioned UBS to enter the market after the close yesterday and offer $NZ1.21 a share to buy the stock."

 

http://www.theaustralian.com.au/business/dataroom/suncorp-makes-play-for-tower/news-story/4243124ba76af926dc14edc5736ce28a

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Interesting - Insurance Insider has the competing offer at $1.30, rather than $1.21.

 

------------

 

Suncorp challenges Fairfax for Tower

Laura Board

 

Suncorp subsidiary Vero has made a competing bid of NZ$1.30 ($0.93) a share for 100 percent of New Zealand insurer Tower, less than two weeks after Tower accepted a NZ$1.17 offer from Fairfax Financial.

 

Tower said in a press release earlier today that Suncorp had initially sought to buy up to 19.99 percent of the New Zealand carrier, with a view to escalate that to 100 percent of the shares.

 

"Tower and its advisers are considering the Suncorp proposal, and working through obligations with respect to the Scheme Implementation Agreement with Fairfax Financial Holdings Limited," said Tower.

 

It promised a market update on material developments "as they occur" and advised shareholders in the meantime to take no action "without carefully assessing all available information and seeking their own professional advice".

 

Fairfax made its acquisition offer on 9 February, announcing that it had been unanimously supported by the Tower board and that it had the backing of Salt Funds Management and ACC, which collectively own 18.1 percent of Tower's stock.

 

Shareholders were expected to vote on the Fairfax proposal in April, with completion envisaged at the end of June.

 

The approach followed Tower's announcement in November that it would spin off claims at its Canterbury unit into a company dubbed RunOff Co. Chairman Michael Stiassny has said Tower would revive its spin-off plan if the Fairfax proposal collapses.

 

Tower offers car, house, contents, business, travel and other personal insurance lines in New Zealand and the Pacific Islands. It is listed in New Zealand - where it is the number three insurer - and in Australia.

 

It made a loss of NZ$21.5mn in the year ended 30 September, in part because of provisions for Canterbury earthquake claims.

 

Tower stock closed up 16.7 percent at NZ$1.33 in New Zealand and rose 17.5 percent to A$1.24 in Sydney today.

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Does anyone know the break fee Fairfax has in place?

 

Interesting - Insurance Insider has the competing offer at $1.30, rather than $1.21.

 

------------

 

Suncorp challenges Fairfax for Tower

Laura Board

 

Suncorp subsidiary Vero has made a competing bid of NZ$1.30 ($0.93) a share for 100 percent of New Zealand insurer Tower, less than two weeks after Tower accepted a NZ$1.17 offer from Fairfax Financial.

 

Tower said in a press release earlier today that Suncorp had initially sought to buy up to 19.99 percent of the New Zealand carrier, with a view to escalate that to 100 percent of the shares.

 

"Tower and its advisers are considering the Suncorp proposal, and working through obligations with respect to the Scheme Implementation Agreement with Fairfax Financial Holdings Limited," said Tower.

 

It promised a market update on material developments "as they occur" and advised shareholders in the meantime to take no action "without carefully assessing all available information and seeking their own professional advice".

 

Fairfax made its acquisition offer on 9 February, announcing that it had been unanimously supported by the Tower board and that it had the backing of Salt Funds Management and ACC, which collectively own 18.1 percent of Tower's stock.

 

Shareholders were expected to vote on the Fairfax proposal in April, with completion envisaged at the end of June.

 

The approach followed Tower's announcement in November that it would spin off claims at its Canterbury unit into a company dubbed RunOff Co. Chairman Michael Stiassny has said Tower would revive its spin-off plan if the Fairfax proposal collapses.

 

Tower offers car, house, contents, business, travel and other personal insurance lines in New Zealand and the Pacific Islands. It is listed in New Zealand - where it is the number three insurer - and in Australia.

 

It made a loss of NZ$21.5mn in the year ended 30 September, in part because of provisions for Canterbury earthquake claims.

 

Tower stock closed up 16.7 percent at NZ$1.33 in New Zealand and rose 17.5 percent to A$1.24 in Sydney today.

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  • 4 months later...
  • 4 weeks later...

Break fee and a second chance?

 

Tower chairman Michael Stiassny says it will consider the impact on its business and whether a capital raising will be needed after the Commerce Commission rejected a bid by Vero Insurance to merge the two businesses.

 

Shares in Tower took a pounding at the opening of trading on the NZX this morning, falling 29 per cent to 90c after the commission's decision to knock-back the $1.40 a share offer.

 

The shares have since bounced back to 96c but are at the lowest they have been since February before Tower received a bid by Fairfax Financial Holdings to buy the company for $1.17 per share.

 

Vero, which is owned by Australia's Suncorp, fought off Fairfax, with its higher bid but needed approval from the commission for the deal because it is already a key player in the New Zealand insurance market.

 

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11895162

 

cheers

 

nwoodman

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