Tower makes surprise takeover offer for Fidelity

Friday 1st October 2010

Tower, 35% owned by Guinness Peat Group, has made a $118 million cash and scrip takeover offer for Fidelity Life, lifting its share of New Zealand's life insurance market.

Tower has offered $82 a share for Fidelity, made up of $55 cash and $27 of Tower shares, it said in a statement.

The terms of the offer "have been based on the limited publicly available information in respect of Fidelity" and Tower will shortly make a request for further details and "is hopeful that this request will be positively received by the directors".

The offer price is a 2.5% premium to the price Fidelity last changed hands at, Tower said. The inclusion of Tower shares "enables Fidelity shareholders to retain an interest in the combined company, but with liquidity not previously available to them".

Merging the two firms "will reinforce their ability to compete in an industry where most players are overseas owned," said chairman Tony Gibbs.

Fidelity has 11 shareholder allocations, according to the Companies Office. They include chief executive Milton Jennings, insolvency adviser Jeffrey Meltzer, and chairman Ian Braddock, who is a principal of accounting firm Adsett & Braddock.

Fidelity ranks eighth in New Zealand for risk insurance premiums, with 84,761 on record in the June quarter. Tower was ninth, with 74,536. On that basis, a merger would elevate them to third place.

The offer is conditional on reaching 90% of the target company and on confirmation of Fidelity's financial position.

Tower has retained Goldman Sachs & Partners as financial advisor.

Shares of Tower rose 1.1% to $ $1.85 when they resumed trading, having been halted for the announcement.

Businesswire.co.nz

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