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Suncorp lifts Tower stake to key level

Suncorp has increased its stake in Tower to a key 19.99% stake as it awaits the New Zealand insurer’s response to a proposed takeover.

Tower says it is seeking more information from Suncorp before it makes a recommendation to shareholders on the bid, which tops a rival offer from Canadian group Fairfax.

Suncorp offered $NZ1.30 ($1.19) a share for the whole company, but Tower says it has paid as much as $NZ1.40 ($1.28) in building the key stake.

“We would expect all shareholders to benefit equally from a sale and will be asking Suncorp to advise whether it intends to employ differential pricing in its proposal,” Tower Chairman Michael Stiassny said. “In addition, we will seek to clarify aspects of the highly conditional nature of its indicative scheme proposal.”

Suncorp’s proposal compares with $NZ1.17 ($1.07) per share offered by Fairfax, valuing Tower at $NZ197 million ($180 million).

New Zealand’s Commerce Commission last week released a statement of preliminary competition issues on the Suncorp deal.

“The main focus of our investigation is likely to be on the underwriting level,” it says.

“We will also consider the impact of the proposal on the distribution of insurance to consumers through intermediaries such as brokers and banks.”

Submissions are due by close of business on April 6. The regulator is scheduled to make a decision by May 5.

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