News eDaily03 Jul 2017

New Zealand:Competition body defers decision on Tower takeover

03 Jul 2017

The Commerce Commission, New Zealand's competition enforcement agency, has delayed its final decision on whether insurance company Vero, a unit of Australian financial services group Suncorp, will be allowed to buy 100% of rival Tower after raising some concerns about the proposed deal.

The Commission, in a statement, has moved its deadline to 26 July after Vero Insurance New Zealand asked for the extension to provide additional time to respond to a letter from the regulator outlining issues.

The watchdog sent Vero a Letter of Unresolved Issues on 16 June 2017 that outlined the areas it was continuing to investigate concerning competition issues in the provision of domestic house and contents insurance and private motor vehicle insurance.

The deal has already received the blessing of Tower's board after Vero raised its offer last week, but needs regulatory and shareholder approval to go ahead. Vero is offering NZ$1.40 (US$1.02) per share, an increase of 10 NZ cents over its previous offer for Tower. The new price values Tower at about NZ$236 million. Vero currently holds 19.99% of shares in Tower.

The Commission's statement of preliminary issues in March said the regulator would initially investigate whether the deal would substantially reduce competition in personal and commercial insurance markets and whether it would boost Suncorp's market power.


 

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