Suncorp has increased its takeover offer for Tower to $NZ1.40 ($1.35) per share, valuing the New Zealand insurer at about $NZ236 million ($227 million).

The group, which has already built a 19.99% stake in Tower, raised its offer from $NZ1.30 ($1.25) after completing a detailed study of the target’s financials.

The bid has topped a $NZ1.17 ($1.12) offer from Canadian financial group Fairfax.

Suncorp New Zealand CEO Paul Smeaton says there is a strong strategic rationale for combining the two businesses.

“We strongly believe in the compelling benefits of the acquisition and the significant value that would be created for Suncorp shareholders and benefits to market competition,” he said.

“We are also committed to protecting Tower’s unique strengths through complementary multi-brand distribution and offering Tower’s customers access to a broader range of products and services.”

The insurer is awaiting approval for the bid from New Zealand’s Commerce Commission, which in March released a statement of preliminary issues for further inquiry.

Suncorp says its Vero New Zealand subsidiary continues to work closely with the commission and is confident there is a strong basis for approval.

An acquisition also requires Reserve Bank of New Zealand clearance.

Tower says its shares have entered a trading halt while it evaluates the updated Suncorp proposal.

“The Tower board of directors will further update the market as quickly as possible,” Chairman Michael Stiassny said. “In the meantime, the Tower board make no recommendation in respect of the merits of the Vero proposal.”

Tower has so far recommended the Fairfax offer, which requires a shareholder vote, while waiting for Suncorp to firm up its proposal.