TORONTO, ONTARIO and AUCKLAND, NEW ZEALAND--(Marketwired - Feb 8, 2017) -
8 February 2017 (Toronto Time)/9 February 2017 (New Zealand Time)
Highlights:
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All cash offer of $1.17 per Tower share, for an aggregate acquisition cost of $197 million (approximately US$144 million at current exchange rates), represents a premium of 48% to Tower's closing share price on 8 February 2017 and a 47% premium to Tower's three-month volume weighted average price (VWAP)
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Shareholders holding over 18% of Tower shares have entered into firm voting agreements to vote in favour of the transaction
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Offer unanimously supported by the Tower board, in the absence of a superior proposal
Tower Limited ("Tower") (TWR.NZ) (TWR.NZ) and Fairfax Financial Holdings Limited ("Fairfax") (FFH.TO)(TSX:FFH.U) are pleased to announce that they have entered into a Scheme Implementation Agreement.
Under this agreement, Fairfax will acquire 100% of Tower shares at $1.17 per share for an aggregate purchase price of $197 million (approximately US$144 million at current exchange rates) (the "Fairfax Proposal"). The transaction has been unanimously approved by the Tower board of directors. In addition, two of Tower's major shareholders, Salt Funds Management and ACC (who collectively hold 18.1% of Tower shares), have entered into firm voting agreements under which they have committed to vote in favour of the Fairfax Proposal.
The price of $1.17 per share represents a premium of 48% to Tower's closing share price on 8 February 2017 and a 47% premium to Tower's three-month volume weighted average price (VWAP).
Since announcing on 29 November 2016 its intention to create RunOff Co, Tower has progressed planning for separation which was designed to provide a path to unlock unrealised value for shareholders. In the course of this work, the Board had been approached by Fairfax.
Tower Chairman Michael Stiassny said, "Given the substantial premium to Tower's share price, the certainty provided by the Fairfax Proposal and the support it has received from Salt Funds Management and ACC, the Board determined to unanimously recommend the Fairfax Proposal to all shareholders, in the absence of a superior proposal. Tower's separation strategy will be pursued in the event that the Fairfax Proposal is not successful."
"Tower is one of the largest insurers in New Zealand and the Pacific Islands, with a long-standing history, good brand recognition and a strong market position," said Prem Watsa, Chairman and CEO of Fairfax. "The acquisition of Tower will provide us with an immediate significant presence, with a strong management team, which will continue to be led by Richard Harding, in a market where Fairfax currently has limited exposure."