Fidelity – “a nice size and fit for TOWER”
TOWER believes Fidelity Life is a "nice size and fit" for the company and that a takeover would create a more efficient organisation as both companies have "good people and good systems".
Friday, October 1st 2010, 4:38PM
by Jenha White
TOWER chairman Tony Gibbs says it will be great to see where the $118 million offer goes with $82 per Fidelity share, comprising $55 in cash and $27 in the market value equivalent in TOWER shares.
"Hopefully we will talk with Fidelity Life about the offer next week, we have been talking with them on and off over a period of time. We have been thinking about this for quite a while," he says.
Fidelity Life chief executive Milton Jennings says he can't make any opinion or comment at this stage as the company has to follow through with a legal process.
Gibbs says TOWER made an offer on Fidelity Life rather than any other insurance companies because it would fit well, but this is not to say it can't buy another company at some stage.
"Bringing together these two iconic New Zealand controlled life insurance companies underscores the service each has provided to New Zealand policy holders over a long period and will reinforce their ability to compete in an industry where most players are overseas owned".
He says the offer structure of cash and shares was carefully thought out as there are a lot of trustees in the Gordon Watson Trust that have been in issuance for a long time and TOWER would want that to continue.
"We are very hopeful the Fidelity Life directors will accept the offer on the friendly basis it has been sent."
Financial Focus director Murray Weatherston says it's either eat or be eaten for Fidelity Life.
"In this new world size really does matter and if you can join forces with someone four times bigger on friendly terms, then that's not too bad.
"My pick is that it's an agreed marriage between the two companies and that this or a slightly higher price will mean some shareholders will be willing to take cash or take cash and move into high positions at TOWER."
RMS Software chief executive Chris Louisson says he is "absolutely horrified" at the announcement.
"Fidelity Life are a cutting edge company who have a track record of working unbelievably hard with brokers and clients.
"Fidelity is small and nimble and it's horrifying to see a corporate conglomerate like TOWER take them over - it could destroy the company and that would be a disaster."
After Fidelity Life founder and major shareholder Gordon Watson passed away in May the company was asked about its future ownership structure.
Watson transferred his majority shareholding in Fidelity Life into the Fidelity Family Trust more than 25 years ago. He made this move to provide a stable, long-term ownership structure both during and after his life-time.
Fidelity Life said "it was Gordon's wish that those shares would always remain there so that Fidelity Life would continue to be a New Zealand owned life company".
It also said the death of Gordon Watson had no affect on the ownership of Fidelity Life.
"The trust presently holds 55% of the shares in Fidelity Life. The board expects that this will remain the position for the forseeable future."
Jenha is a TPL staff reporter. jenha@tarawera.co.nz
| « TOWER makes surprise bid for Fidelity | KiwiSaver mismatch a 'huge challenge' for advisers » |
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