Dai-ichi Life Insurance Company Limited (Dai-ichi) has made an offer to purchase a 100% stake in TOWER Australia (TOWER).
On 29 December 2010, TOWER announced to the market that they had received a proposal from the Japanese insurer, which currently holds 29% of TOWER shares.
TOWER’s Independent Directors have unanimously recommended that shareholders should vote in favour of the offer.
In a letter to shareholders, the Independent Directors said that they believe the offer “…represents a compelling premium and highly attractive outcome for our shareholders.”
Rob Thomas, Chairman of TOWER, said that talks had commenced with Dai-ichi in mid-December, and cited a number of reasons for the decision to move forward with the proposal.
… upcoming regulatory changes … were key drivers in the decision
Mr Thomas indicated that upcoming regulatory changes, including APRA’s proposals to update the capital standards for general insurers and life insurers, were key drivers in the decision. He also indicated that raising capital would enable TOWER to better service its clients. “To deliver the best outcome to our customers we need to keep abreast of technology and service and delivery and that is expensive,” said Mr Thomas.
The offer is subject to an independent review and Australian and Japanese regulatory approval. A shareholder vote is expected in April.
