Tower has launched a $NZ118 million ($90 million) bid for unlisted privately owned Fidelity Life Assurance Company.

The offer consists of $NZ55 ($42) in cash and $NZ27 ($20.58) of Tower shares. This is a $NZ2 ($1.52) premium on the last time Fidelity shares traded on June 1 this year.

It has about 150 shareholders with 53% of the shares owned by a single-family trust. Farmers’ Mutual Insurance Association owns a further 11% of Fidelity.

Tower Chairman Tony Gibbs says the offer will enable Fidelity shareholders to retain an interest in the merged company while also offering them liquidity through the NZ Stock Exchange.

“It will reinforce their ability to compete in an industry where most players are overseas-owned,” he said.

Fidelity was founded in 1973 by Gordon Watson and his wife Shirley and currently employs more than 135 staff.

The takeover is subject to Tower receiving a sufficient number of shares to confer 90% or more of the voting rights. It will formally launch the takeover on October 15.