Suncorp’s improved offer for New Zealand insurer Tower has won the support of the takeover target’s board, paving the way for a shareholder vote later this year.

The offer of $NZ1.40 ($1.35) per share values Tower at $NZ236 million ($226.8 million) and compares with a rival $NZ1.17 ($1.12) bid from Canada’s Fairfax.

Fairfax has advised Tower it will not increase its offer price.

Tower Chairman Michael Stiassny says the company took advice from Goldman Sachs and Chapman Tripp before deciding that the offer from Suncorp unit Vero New Zealand is superior.

“We are pleased Suncorp has seen fit to increase its non-binding indicative offer from $NZ1.30 ($1.25) per share to a firm offer that meets the price previously paid to a minority of institutional investors.” Mr Stiassny said.

Suncorp has already built a 19.99% stake in Tower after buying shares from institutions. Shareholders are expected to meet in September to vote on the offer for the remainder.

“Vero intends to work closely with the Tower board to bring the transaction to fruition, providing the best result for both companies’ shareholders and customers,” Suncorp said.

The deal is subject to New Zealand Commerce Commission clearance and other regulatory approvals. The commerce commission last week extended its decision date to July 26 from a previous June 30 deadline.