New Zealand's largest listed general insurer Tower has launched a $118 million takeover offer for life insurer Fidelity Life.Tower, 35% owned by Guiness Peat Group, has offered to pay $118 million, being $82 per Fidelity share, for 100% of the shares in N
New Zealand’s largest listed general insurer Tower has launched a $118 million takeover offer for life insurer Fidelity Life.
Tower, 35% owned by Guiness Peat Group, has offered to pay $118 million, being $82 per Fidelity share, for 100% of the shares in New Zealand-owned Fidelity Life.
The offer comprises $55 in cash and $27 in the market value equivalent in Tower shares.
The offer represents a small premium to the last traded price for Fidelity of $80, and the inclusion of Tower shares as well as cash would enable Fidelity shareholders to retain an interest in the combined company, but with liquidity not previously available to them.
Shares in Tower were placed in a trading halt this morning, ahead of the takeover announcement, having closed last night at $1.83 on the NZX.
In accordance with the Takeovers Code, the earliest the insurer can formally make the offer for Fidelity is October 15.
Tower said its offer was based on the limited publicly available information on Fidelity Life and it would soon table a request with the Fidelity’s directors for access to additional information.
Tower chairman Tony Gibbs said the union of the two New Zealand-controlled insurance companies would reinforce their ability to compete in an industry where most players were overseas owned.
Tower has been a steady if unspectacular performer against the backdrop of a difficult economy, reporting a $28.1 million profit for the 2010 financial year, up 5.6% on the previous year.
It recently announced insurance claims arising from the Canterbury earthquake would cost the company $5 million before tax.
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