Fairfax Financial is set to acquire Tower in a deal worth $197million, it has been announced.
The Canadian financial giant had an offer of $1.17 per Tower share unanimously supported by the Tower board and will acquire 100% of the company.
Tower chairman Michael Stiassny, who had revealed plans in November last year to create a separate RunOff Co purely for Canterbury earthquake claims, said the Board was approached by Fairfax in the course of that work.
He said: “Given the substantial premium to Tower’s share price, the certainty provided by the Fairfax Proposal and the support it has received from [major shareholders] Salt Funds Management and ACC, the Board determined to unanimously recommend the Fairfax Proposal to all shareholders, in the absence of a superior proposal.”
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He added: “Tower’s separation strategy will be pursued in the event that the Fairfax Proposal is not successful.”
Prem Watsa, chairman and CEO of Fairfax said that the acquisition would help Fairfax develop a presence in a new market.
“The acquisition of Tower will provide us with an immediate significant presence, with a strong management team, which will continue to be led by Richard Harding, in a market where Fairfax currently has a limited exposure.”
Watsa continued that the key factors that Fairfax was able to present an attractive proposal to Tower were the speed of the transaction and Fairfax’s reputation in other deals.
The Fairfax proposal is subject to approval from the Reserve Bank of New Zealand, the New Zealand Overseas Investment Office, Pacific Islands regulatory authorities and shareholders.
The dual NZX and ASX-listed insurer plans to hold a special meeting of shareholders in April 2017 to approve the deal.
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