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Vero Tower buyout decision delayed

NZ Newswire logoNZ Newswire 29/06/2017 Paul McBeth

The Commerce Commission has delayed its decision on whether insurance company Vero will be allowed to buy rival Tower after raising some concerns about the proposed deal.

The watchdog has pushed out its deadline to July 26 after Suncorp Group-owned Vero Insurance New Zealand asked for more time to respond to a letter from the regulator outlining issues.

The deal has already got the blessing of Tower's board after Vero raised its offer this week, but needs regulatory and shareholder approval to go ahead.

"The commission sent Vero a letter of unresolved issues on 16 June 2017 that outlined the areas it was continuing to investigate concerning competition issues in the provision of domestic house and contents insurance and private motor vehicle insurance," the commission on Friday.

"Vero requested the extension to provide additional time to respond to the commission's letter, and for the commission to take into account recent developments on Vero's purchase offer."

The commission's statement of preliminary issues in March said the regulator would initially investigate whether the deal would substantially reduce competition in personal and commercial insurance markets and whether it would boost Suncorp's market power.

The Australian insurer's New Zealand brands include general insurer Vero, life insurer Asteron Life, and the AA Insurance and AA Life joint ventures with the Automobile Association.

The regulator didn't release the letter of unresolved issues, as it had with a proposed merger of Sky Network Television and Vodafone New Zealand which was ultimately rejected, and isn't seeking further submissions on the application.

Vero played down concerns raised by rivals in the application, saying Tower wasn't a particularly aggressive company in the market, and that the enlarged insurer would still lag behind the Insurance Australia Group's leading market share.

Tower last traded at $1.32, below the $1.40 price Vero is willing to pay.

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