Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

Tower is firmly in play, with the Suncorp offer 11% above the NZD 1.17 per share cash takeover proposal from Fairfax Financial. Suncorp has the strategic upper hand, having already secured a blocking stake, with its 11.14% holding in Tower acquired for NZD 1.30 per share. Suncorp’s aggressive stance is evidenced by brokers standing in the market to acquire further shares, taking its holdings up to 19.9%. We raise our fair value estimate to NZD 1.30 from NZD 1.17 per share, in line with the higher offer price.We had not expected a higher bid to emerge, but it is a good outcome for Tower shareholders. The Tower Board is considering the Suncorp proposal and assessing its obligations under the scheme implementation agreement with <a href="https://www.smartkarma.com/entities/24007" target="_blank" data-smartkarma-citation="entities:24007:1">Fairfax Financial Holdings Ltd. (FFH CN)</a>. The board has not come to any conclusions yet, but it is hard to imagine it not supporting the higher cash offer from Suncorp. We suggest Tower shareholders take no action at this stage. The ball is now in the court of Fairfax Financial, which has yet to decide whether to make a higher counter bid. Tower shares are trading just above the new offer price. Tower shareholders who don’t expect higher counter bid should consider selling on-market now.Tower stock is currently trading at NZD 1.33 per share, approximately 2% above Suncorp’s offer price. At the bid price, the stock’s market capitalisation is approximately NZD 223 million, and if successful, the proposed acquisition would be a small bolt-on acquisition for <a href="https://www.smartkarma.com/entities/4218" target="_blank" data-smartkarma-citation="entities:4218:1">Suncorp Group Ltd (SUN AU)</a> (market cap of AUD 17 billion). The proposed deal makes sense for Suncorp as it bulks up its New Zealand operations, creating a business with gross written premium of NZD 1.6 billion. The proposal is in the very early stages, but Suncorp management believes the combined business would generate significant shareholder value through cost efficiencies, as well as reinsurance and technology synergies.Analysts: David Ellis and Ravi Reddy

Tower is firmly in play, with the Suncorp offer 11% above the NZD 1.17 per share cash takeover proposal from Fairfax Financial. Suncorp has the strategic upper hand, having already secured a blocking stake, with its 11.14% holding in Tower acquired for NZD 1.30 per share. Suncorp’s aggressive stance is evidenced by brokers standing in the market to acquire further shares, taking its holdings up to 19.9%. We raise our fair value estimate to NZD 1.30 from NZD 1.17 per share, in line with the higher offer price.We had not expected a higher bid to emerge, but it is a good outcome for Tower shareholders. The Tower Board is considering the Suncorp proposal and assessing its obligations under the scheme implementation agreement with Fairfax Financial Holdings Ltd. (FFH CN). The board has not come to any conclusions yet, but it is hard to imagine it not supporting the higher cash offer from Suncorp. We suggest Tower shareholders take no action at this stage. The ball is now in the court of Fairfax Financial, which has yet to decide whether to make a higher counter bid. Tower shares are trading just above the new offer price. Tower shareholders who don’t expect higher counter bid should consider selling on-market now.Tower stock is currently trading at NZD 1.33 per share, approximately 2% above Suncorp’s offer price. At the bid price, the stock’s market capitalisation is approximately NZD 223 million, and if successful, the proposed acquisition would be a small bolt-on acquisition for Suncorp Group Ltd (SUN AU) (market cap of AUD 17 billion). The proposed deal makes sense for Suncorp as it bulks up its New Zealand operations, creating a business with gross written premium of NZD 1.6 billion. The proposal is in the very early stages, but Suncorp management believes the combined business would generate significant shareholder value through cost efficiencies, as well as reinsurance and technology synergies.Analysts: David Ellis and Ravi Reddy

Second Bidder for Tower Emerges With a Higher Offer; FVE Increased to NZD 1.30

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/4218" target="_blank" data-smartkarma-citation="entities:4218:1">Suncorp Group Ltd (SUN AU)</a> (Suncorp)’s wholly owned subsidiary, Vero Insurance New Zealand Limited (Vero NZ), has <a href="http://www.asx.com.au/asxpdf/20170222/pdf/43g5r10j7vz43j.pdf" target="_blank">acquired</a> 11.14% of the ordinary shares in <a href="https://www.smartkarma.com/entities/12173" target="_blank" data-smartkarma-citation="entities:12173:1">Tower Ltd (TWR NZ)</a> (Tower) @NZ$1.30/share, and is “standing in the market to acquire up to 19.9%” of the shares in Tower.In addition, Suncorp has submitted a non-binding indicative <a href="http://www.asx.com.au/asxpdf/20170222/pdf/43g5zz8n127qx0.pdf" target="_blank">proposal</a> to Tower’s board to acquire the remaining 88.86% of outstanding shares, also at a price of NZ$1.30/share.Our discussions with Suncorp indicate it is…

Suncorp Group Ltd (SUN AU) (Suncorp)’s wholly owned subsidiary, Vero Insurance New Zealand Limited (Vero NZ), has acquired 11.14% of the ordinary shares in Tower Ltd (TWR NZ) (Tower) @NZ$1.30/share, and is “standing in the market to acquire up to 19.9%” of the shares in Tower.In addition, Suncorp has submitted a non-binding indicative proposal to Tower’s board to acquire the remaining 88.86% of outstanding shares, also at a price of NZ$1.30/share.Our discussions with Suncorp indicate it is…

New Zealand

TOWER Limited provides risk insurance and wealth management products and services. The Company operates in general insurance, health & life insurance, and investments and funds management.

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Tower Ltd (TWR NZ)

Second Bidder for Tower Emerges With a Higher Offer; FVE Increased to NZD 1.30

Tower is firmly in play, with the Suncorp offer 11% above the NZD 1.17 per share cash takeover proposal from Fairfax Financial. Suncorp has the...

Morningstar, Inc.

Tower Ltd - Suncorp Stakes Its Claim

Suncorp Group Ltd (SUN AU) (Suncorp)’s wholly owned subsidiary, Vero Insurance New Zealand Limited (Vero NZ), has acquired 11.14% of the ordinary...

David Blennerhassett

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