Tower terminates Vero deal, says it's open to renegotiations
By Paul McBeth
Nov. 7 (BusinessDesk) - Tower has terminated a deal that would have seen Suncorp Group's Vero Insurance take over the New Zealand insurer, but is open to renegotiating a new transaction if a High Court appeal overturns a regulatory block.
Auckland-based Tower terminated a scheme implementation agreement with Vero after the deal passed its end date, but has told the Australian insurer it's willing to discuss new terms once it's raised capital. The $236 million takeover was blocked by the Commerce Commission over competition concerns, although both insurers are appealing the decision which is scheduled to be heard in January.
"Tower has advised Vero that it is willing to negotiate a new SIA, which may result in changes to key terms, following completion of its plans to raise further capital," chair Michael Stiassny said in a statement to the ASX yesterday. "The Tower board of directors is continuing to develop plans to raise further capital and will update the market with its full year results on 14 November."
In May, Tower 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, with the Australian-owned company ultimately winning over the Tower board before the regulator's decision.
Tower shares last traded at 80.5 cents on the NZX, and are down 3.6 percent this year. Vero offered $1.40 a share, trumping Fairfax Financial's bid at $1.17 a share.