SYDNEY New Zealand insurer Tower Ltd (TWR.NZ) said on Thursday it has agreed to sell all its shares to Canada's Fairfax Financial (FFH.TO) for NZ$197 million ($143 million) in a deal that was unanimously approved by its board.
Fairfax will pay Tower shareholders NZ$1.17 per share, a premium of 48 percent to the New Zealand firm's closing price on Feb. 8. Shares in Tower, which has a market capitalization of NZ$187 million, soared 40.5 percent after the announcement to a five-month high of NZ$1.11
Foreign insurers from mainly Canada and Japan have been desperate for overseas growth and have been looking at Australia and New Zealand to sate their appetites.
"The acquisition of Tower will provide us with an immediate significant presence, with a strong management team ... in a market where Fairfax currently has limited exposure," said Prem Watsa, chairman and CEO of Fairfax.
Fairfax's proposal is subject to customary conditions, including approvals from the Reserve Bank of New Zealand, the New Zealand Overseas Investment Office, Pacific Islands regulatory authorities and Tower shareholders.
Tower is the third-largest insurance group in New Zealand, offering car, house, contents, business, travel and other personal insurance lines to its 265,000 customers.
Toronto-based Fairfax, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.
In recent months, National Australia Bank (NAB.AX) has sold 80 percent of its life business to Nippon Life Insurance for A$2.4 billion. Reuters has reported that Japanese and HK-based firms have shown interest in Australia and New Zealand Banking Group's (ANZ.AX) insurance and wealth business.
(Reporting by Swati Pandey; Editing by Stephen Coates)