One of New Zealand's biggest insurers, Tower, looks set to be bought by Canadian company Fairfax Financial.
The announcement was made in a joint statement on the NZX today.
Tower is a general insurer in New Zealand and the Pacific Islands, offering car, house, contents, business, travel and other personal insurance. It has about 265,000 customers in New Zealand.
The proposed acquisition, which was unanimously supported by the Tower board, was for $1.17 per Tower share, for an aggregate cost of $197 million.
The price represents a premium of 48% to Tower's closing share price yesterday and a 47 per cent premium to the company's three-month volume weighted average price.
The statement said two of Tower's major shareholders, Salt Funds Management and ACC, which collectively hold 18.1% of the company's shares, had entered into "firm voting agreements under which they have committed to vote in favour of the deal".
Fairfax Financial chief executive Prem Watsa said the acquisition would provide the company with an immediate presence in a market where it currently had limited exposure.
"The key factors in Fairfax's ability to present an attractive proposal to Tower were the speed at which the transaction could be conducted, the reputation of Fairfax for closing transactions and treating stakeholders fairly," Mr Watsa said.
The Fairfax Financial offer is subject to customary conditions, including approvals from the Reserve Bank, the New Zealand Overseas Investment Office, Pacific Islands regulatory authorities and Tower shareholders.
In statement today, Tower said it would call a special meeting of shareholders to obtain their approval, expected to be held in April. Approval of that meeting must be by at least 75% of votes cast, representing more than 50% of the total voting rights of the company.
Shareholders would receive detailed information from Tower outlining the deal and instructions for voting.
The Tower board said the Fairfax offer did not affect Tower Insurance policies and the rights of policy holders. All policies and rights would remain with Tower Insurance (or relevant Pacific Island subsidiaries) in the event of a change of ownership of Tower Ltd.
Fairfax Financial Holdings Ltd is based in Toronto holding company listed on the Toronto Stock Exchange, which through its subsidiaries, is involved in property and casualty insurance, and reinsurance and investment management, the statement said.
Tower is a general insurer in New Zealand and the Pacific Islands, offering car, house, contents, business, travel and other personal insurance. It has about 265,000 customers in New Zealand.
