Suncorp has made an offer to buy New Zealand insurer Tower after acquiring an 11.14% stake in the company.

The group’s Vero subsidiary is offering $NZ1.30 ($1.22) per share for Tower, the largest New Zealand-owned insurer operating in the market.

The move follows a $NZ197 million  ($184 million) bid for Tower launched earlier this month by Canada’s Fairfax Financial Holdings.

Suncorp New Zealand CEO Paul Smeaton says the proposed deal provides an opportunity to strengthen the company’s strategic position in the highly competitive New Zealand insurance market, creating a business with gross written premium of $NZ1.6 billion ($1.5 billion).

“The combined business would generate significant shareholder value through cost efficiencies as well as reinsurance and technology synergies.”

Suncorp says it has already bought 11.14% of Tower and is “standing in the market” to acquire up to 19.9%.

A “non-binding indicative” proposal has also been submitted to the Tower board outlining Suncorp’s interest in acquiring the remaining 88.86% of the company.

“Tower and its advisers are considering the Suncorp proposal and working through obligations with respect to the Scheme Implementation Agreement with Fairfax Financial Holdings Limited (FFHL), Tower said in a statement today.

The board advised shareholders not to take any action “without carefully assessing all available information and seeking their own professional advice”.

More details in our regular bulletin on Monday.