MELBOURNE, Australia--Suncorp Group Ltd. (SUN.AU) has sweetened a takeover offer for Tower Ltd. (TWR.NZ), valuing the smaller company at about 236.1 million New Zealand dollars (US$172 million), in an effort to strengthen its position in the competitive New Zealand insurance market.
The Australian insurer and regional bank on Monday said it would offer NZ$1.40 cash a share after completing due diligence on its target.
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Suncorp in February trumped a NZ$1.17 a share bid from Canada's Fairfax Financial Holdings Ltd. (FFH.T), offering NZ$1.30 and acquiring an initial 11.1% stake in Tower. It lifted that to 19.9% by mid-March, although it paid NZ$1.40 each for the subsequent shares.
"There is strong strategic rationale for combining the businesses of Suncorp New Zealand and Tower," Paul Smeaton, chief executive of Suncorp's New Zealand arm, said.
Tower said it was assessing the revised proposal but was for now making no recommendation on the merits of a deal. Its New Zealand and Australian shares were placed in a trading halt early Monday.
Suncorp previously said a merger of the companies would consolidate its position in New Zealand's general insurance market by creating a business with gross written premiums of NZ$1.6 billion and generating value through reduced costs.
Suncorp's bid remained subject to approval by Tower's board, and from New Zealand's central bank and Commerce Commission. It has already received New Zealand Overseas Investment Act consent, Tower said.
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(END) Dow Jones Newswires
June 25, 2017 19:54 ET (23:54 GMT)