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Tower board still mulling M&A after failed Fidelity bid

Tower board still mulling M&A after failed Fidelity bid

by Paul McBeth

Nov. 26 (BusinessDesk) – Tower Ltd., the insurer and wealth manager controlled by Guinness Peat Group, is still considering what to do with its swelling war chest after a “satisfactory” result in the 2010 year.

Managing director Rob Flannagan told a briefing in Auckland the company’s board is “reviewing the capital position and liquidity” and merger and acquisition activity is “high in the directors’ minds” as its cash position rose by a further $61 million to $207.8 million as at Sept. 30.

That comes after pulling the plug on a hostile tilt for Fidelity Life Assurance Co. that was rebuffed by the target firm.

“The question remains after the attempt to buy Fidelity – what are they going to do?” said Alan Moore, who helps manage $600 million for Milford Asset Management.

Last month Tower made a $118 million cash and scrip offer for Fidelity out of the blue at a 2.5% premium to the price the target firm last changed hands at.

Fidelity’s shareholders shot down the offer, and Tower gave up when it couldn’t squeeze more information from its rival.

Tower lifted net profit 16% to $58.1 million as it boosted operating revenue 17% to $564.2 million while clamping down on net claims expenses, which rose just 1.8% to $274.9 million.

Total expenses rose 11% to $467.8 million with management and sales expense falling 4.7%.

Moore said the result was “satisfactory but underwhelming” and “there may be some disappointment the dividend wasn’t better.”

Tower will pay a six cents per share dividend, taking the payout for the year to 10 cents, an 11% increase on the previous year.

The four cents per share first-half dividend was the company's first interim payout since July 2002. Tower’s shares rose 2.6% to $1.96 and have dropped 5.5% this year.

(BusinessDesk) 12:05:27

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