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Tower board backs increased Vero takeover

NZN 27/06/2017 Paul McBeth

Tower's board is backing the increased takeover bid from Suncorp Group-owned Vero Insurance New Zealand, provided the $236 million offer wins approval from local regulators.

The Auckland-based insurer has signed a scheme implementation agreement with ASX-listed Suncorp, where local subsidiary Vero will pay $1.40 a share to buy the NZX-listed general insurer.

The deal, which trumped an earlier merger proposal from Canada's Fairfax Financial Holdings at $1.17 a share, valuing Tower at $197.3m, is subject to the merger getting antitrust approval from the Commerce Commission.

Tower shares jumped 14 per cent to $1.32 after the announcement, which allowed the stock to come out of a trading halt.

That regulator decision was expected to be wrapped up by the end of the week, but Tower chairman Michael Stiassny said the deadline is likely to be pushed out into July.

"After careful consideration, taking into account relevant factors and advice from Goldman Sachs and Chapman Tripp, Tower considers the Vero SIA is a superior proposal to the existing Fairfax scheme," Mr Stiassny said in a statement.

"Fairfax has advised that it will not increase its offer price."

Tower's board held back from making a recommendation on the rival bids when Vero initially swooped in with an offer of $1.30 a share, saying it would work to get the best deal possible for shareholders.

The Vero takeover will also need shareholder approval at a special meeting likely to be held in September, with at least 75 per cent of votes cast in favour of the deal, and that those votes represent more than 50 per cent of the shares on issue.

The transaction also needs Reserve Bank and Pacific Island regulatory approvals.

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