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Tower chair Stiassny cautions shareholders over Suncorp offer

Wednesday 22nd February 2017

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Tower chairman Michael Stiassny is warning shareholders to tread carefully over the offer to buy their shares from ASX-listed insurer Suncorp Group, which owns rival Vero Insurance. 

The NZX-listed general insurer's board has already recommended shareholders accept a $197 million offer from Canada's Fairfax Financial Holdings at $1.17 a share, and wants to fully review a rival bid before making a new recommendation. Tower said Suncorp had approached shareholders via UBS, to buy up to 19.99 percent of the shares at $1.30 apiece, with a view to mounting a full takeover bid. The Australian Financial Review's Street Talk column reported a full bid was expected to be launched on Wednesday. 

"The board’s primary focus remains to optimise value for our shareholders. In order to do so, we need to review and evaluate all options," Stiassny said in a statement. "We will update the market on any further material developments as the circumstances require."

The Fairfax Financial Holdings deal was announced on Feb. 9 and won the backing of Salt Funds Management and Accident Compensation Corp, who collectively own 18 percent of Tower. 

The general insurer posted a loss of $22.3 million in the September 2016 year as lingering claims from the Canterbury quakes were taking longer and were more expensive to settle. Last year it said it would corral those claims into a separate entity called RunOff, and suspended its annual dividend to preserve capital for the new company. It was also weighing up funding options or finding partners to help with the split. 

Stiassny told shareholders to carefully assess the offers in front of them and to seek their own professional advice before making any decisions and reiterated that all policies were unaffected. 

Tower shares last traded at $1.135, and have dropped 25 percent over the past 12 months.

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