Fidelity keenly interested in GPG's 35% Tower stake

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Fidelity Life is keenly interested in Guinness Peat Group's 35% stake in fellow insurance company Tower and says it has already offered to buy its life business.

Monday, February 14th 2011, 4:54PM 1 Comment

by Jenny Ruth

"We've always stated that we're looking for acquisition opportunities," says chief executive Milton Jennings of the 100% New Zealand-owned specialist life insurance and Kiwisaver scheme provider.

When Tower's $118 million takeover offer for Fidelity lapsed in October last year, Fidelity had "most definitely" indicated its interest in Tower's life business, Jennings says. Fidelity's three largest shareholders which control more than 80% of its shares had already rejected Tower's offer before it lapsed.

"Given the statement last week (from GPG), we will be keen to have a look." Fidelity would also be interested in Tower's Kiwisaver business, Jennings says.

However, Tower managing director Rob Flannagan says Fidelity has never made an approach and such an offer has never been considered by Tower's board.

Flannagan says ever since he took on his current role in 2006 he's been aware of gossip that bits and pieces of Tower are going to be sold to third parties and says dealing with such rumours is "like punching a cloud."

"It's disruptive for the staff and it's disruptive for the market. If you're going to make an offer, make an offer."

Last week, GPG announced an orderly realisation of all its assets with the possible exception of Coats.

The Tower stake is GPG's second largest asset. Forsyth Barr analyst Guy Hallwright values it at $180.1 million.

Tower also has health and general insurance businesses.

"It would be difficult (for Fidelity to buy just the life and Kiwisaver parts of Tower) because GPG is only a 35% shareholder," Hallwright says.

"Anything like that would have to be beneficial for all shareholders."

Given the Takeovers Code, any would-be buyer of a stake in Tower larger than 19.9% would have to make at least a partial takeover offer.

Fidelity, and unlisted company with about 150 shareholders, had total assets of $529.4 million at June 30 last year and equity of $112.7 million.

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