Vero to appeal regulator's rejection of Tower takeover
Suncorp Group's Vero Insurance unit will appeal the Commerce Commission's rejection of its $236 million takeover bid for Tower, and has the backing of the NZX-listed general insurer's board.
Auckland-based Tower has been told by Vero its suitor plans to appeal the regulator's decision and will push for a hearing before the end of the year, it said in a statement. Chairman Michael Stiassny said the appeal has the "full support" of Tower's board, and that the NZX-listed company plans to file its own cross-appeal in the coming weeks.
"Tower supports a prompt resolution of the matter," Mr Stiassny said. "In the meantime, the Tower board continues to consider a capital raise to ensure prudent management of the balance sheet and accelerate the transformation of the business."
Vero's attempt to grab more New Zealand market share with the acquisition of NZX-listed general insurer Tower was rejected by the Commerce Commission last month because the antitrust regulator deemed the remaining rival insurers would be too small to effectively constrain the merged entity. Vero offered to pay $1.40 a share after building up a 19.99% stake.
Tower shares have slumped to 87c since the bid was rejected.
In May, the New Zealand general insurer reported a loss of $8.4 million for the six months ended March 31, narrowing from a loss of $8.7 million a year earlier, as the company struggled with escalating costs from the 2010 and 2011 Canterbury earthquakes. The need for capital and a proposed restructuring shook out competing bids from Vero and Canada's Fairfax Financial Holdings, which the Australian-owned company ultimately winning over the Tower board before the regulator's decision.