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Suncorp Group's Vero Insurance has sold its cornerstone stake in rival insurer Tower to US private equity firm Bain Capital for $53.9million, registering a $7.5million loss in the process.
The Australian-owned insurer has spent $60.5 million building up and retaining a 19.99% shareholding in NZX-listed Tower before mounting a $236million takeover bid that was rejected by the Commerce Commission over fears it would detract from local competition.
Vero bought shares at an average entry price of 91 cents a share, including via participation in Tower's deeply discounted rights issue at 42 cents a share. It was offering $1.40 a share in its failed takeover attempt.
Vero said yesterday it sold its shares to Bain Capital at 80 cents a share, amounting to $53.9million in total. Tower's NZX-listed shares closed at 78 cents on Wednesday and were up 3.9% at 81 cents yesterday.
"Total losses amount to $7.5million, which was within our risk appetite given the compelling nature of the transaction to acquire 100% of Tower and the value creation it would have achieved,'' a spokesman said in an emailed statement.
Suncorp New Zealand recognised a $12million loss on the value of its Tower stake when reporting its first-half results last month, and yesterday's sale is at a premium to that, meaning it will register an $8.5million gain on the sale.