TOWER makes surprise bid for Fidelity

Tower has made a $118 million cash and scrip takeover offer for Fidelity Life, which if successful will lift its share of the life insurance market.

Friday, October 1st 2010, 2:15PM 9 Comments

Tower has offered $82 a share for Fidelity, made up of $55 cash and $27 of Tower shares.

The terms of the offer "have been based on the limited publicly available information in respect of Fidelity" and Tower will shortly make a request for further details and "is hopeful that this request will be positively received by the directors."

The offer price is a 2.5% premium to the price Fidelity last changed hands at, Tower said. The inclusion of Tower shares "enables Fidelity shareholders to retain an interest in the combined company, but with liquidity not previously available to them."

Merging the two firms "will reinforce their ability to compete in an industry where most players are overseas owned," said chairman Tony Gibbs.

Fidelity has 11 shareholder allocations, according to the Companies Office. They include chief executive Milton Jennings, insolvency adviser Jeffrey Meltzer, and chairman Ian Braddock, who is a principal of accounting firm Adsett & Braddock.

Fidelity ranks eighth in New Zealand for risk insurance premiums, with 84,761 on record in the June quarter. Tower was ninth, with 74,536. On that basis, a merger would elevate them to third place.

The offer is conditional on reaching 90% of the target company and on confirmation of Fidelity's financial position.

Tower has retained Goldman Sachs & Partners as financial advisor.

Shares of Tower rose 1.1% to $ $1.85 when they resumed trading, having been halted for the announcement.

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Comments from our readers

On 1 October 2010 at 3:09 pm d byars said:

Not excited.
Gibbs appears adept at destroying shareholder value (Tower/GPG) - wouldn't think this is an attractive proposition to existing Fidelity shareholders.

On 1 October 2010 at 3:16 pm Adolf Fiinkensein said:

They'll struggle to make 90%.

FMG owns 11% and they'd be unlikely to oblige. Not to mention the late Gordon Watson's family trust.

This looks like a bit of desperate publicity seeking by Tower. Maybe if they offered $300 cash per share someone might take a bit of notice.

On 1 October 2010 at 3:31 pm Independant Adviser said:

Not a good option for the NZ market.
We need a supplier that is unique in today's market, being 100% Kiwi & void of ties to Aussie companies & large corporates.

What happened to the Family Trust that owned 51% of the shares?

On 1 October 2010 at 3:58 pm John Clapham said:

As a GPG shareholder and of Tower as well I tend to agree with your earlier correspondent D Byers. As a fan of Fidelity Life's top rating products and "folksy KIWI history", I think it would be a shame but then 'that's progress' ... or is it?

On 1 October 2010 at 4:01 pm John Honest said:

Gordon Watson would be turning in his grave. I join with Gordon in saying to Tower 'Get stuffed!'

On 1 October 2010 at 4:10 pm Roger Gannon said:

One of the great strengths of Fidelity Life was it being NZ owned. The only company that was NZ owned! It would be a shame to lose that. I have an agency with both Fidelity and Tower and have found Fidelity easier to work with.

On 1 October 2010 at 4:40 pm Richard Hurley said:

The Visigoths are at the Gates of Rome

On 1 October 2010 at 6:57 pm Liz Tento Wisdom said:

Tower can invest in training & technology to assist advisers in 21st century post compliance world. If they keep out of the day to day running of Fidelity Life & stay true to Gordon Watsons philosophy it can work !

On 4 October 2010 at 3:16 pm Carol Garrett said:

Somebody has arelady beaton me to it, but Gordon Watson would be spinning in his grave. I am proud of being a loyal Fidelity Life supporter, not so keen on being a Tower adviser.