Dai-ichi will buy 19.9% of Tower immediately and seek regulatory and shareholder approval to take up the remaining 9.8% of GPG's holdings.
GPG and Dai-ichi have agreed on a sale price of $A3.75 ($NZ4.81) a share, a considerable market premium.
The total price will be $A376.3 million ($NZ483.48 million).
The transaction consists of three tranches: 50.3 million (14.9%) shares have been sold unconditionally at $A3.75 per share; 16.9 million (5%) shares will be sold subject to approval by Australian regulatory authorities (Foreign Investment Review Board and Australian Prudential Regulation Authority) at a price of $A3.75 per share; 3.2 million (9.8%) shares will be sold subject to approval by both Australian regulatory authorities and Tower Australia shareholders at a price of $A3.75 a share.
The value of Tower Australia's gross assets at March 31, 2008, was $A35 billion ($NZ4.5 billion) and in in the six-month period to March 31, Tower Australia's profit was $A30.9 million.
GPG's two directors on the Tower Australia board, Dr Gary Weiss and Mr Michael Jefferies, will resign immediately.
Tower Australia managing director Jim Minto said in a phone conference that GPG had been approached by Dai-ichi in an unsolicited offer for the stake.
GPG had been happy to hold its Tower stake but the offer was too attractive to turn down.
"The first we heard about it was when GPG advised the independent directors it had had such an approach," Mr Minto said.
Dai-ichi was not given any due diligence information and had agreed the price with GPG.
Tower did not know the price until it was released to the market, he said.
The investment by Dai-ichi was its first in Australia and it had indicated it was prepared to back the business, the management and the strategy.
Dai-ichi was one of Japan's largest life insurers and one of the world's top 10.
The Australian investment followed Dai-ichi's continuing expansion into the Asia-Pacific life insurance market.
In recent years, the company had invested in Taiwan, Vietnam, India and Thailand.
Tower's independent directors were expected to hold a general meeting in October to seek shareholder approval for the final tranche of shares being sold to Dai-ichi, Mr Minto said.
If Tower Australia shareholders approved the transaction, Dai-ichi would provide two directors to the Tower board.
GPG had been an active shareholder in Tower for more than five years and had played a significant role in the group's strategic direction.
"We have enjoyed working with GPG and thank them for their significant support and assistance as an investor and on the board over the past five years," he said.
