GPG suspected as Tower buyer

Tower's acting chief executive, Keith Taylor, said he had heard rumours but could not confirm the buyer's identity.

But he did confirm that stockbroker JB Were & Son had stood in the market on behalf of a client to buy up to 10 per cent of Tower.

In New Zealand, where most Tower shares are normally traded, the shares soared 30c to $NZ2.10, with 7.24 million shares, or about 4 per cent of the group's issued capital, changing hands.

If going above this level, a buyer would be required to disclose their position.

Tower also has a 10 per cent shareholder cap that would require shareholder assent to be discarded.

On the Australian market, 860,081 Tower shares were traded, rising 20c to $1.87, but even Australian investors tend to trade their shares in NZ because of the deeper market for the stock there.

GPG executive director Gary Weiss did not return phone calls.

But it would appear to be the most likely buyer, since the group often makes such trades through JB Were.

GPG used Were for recent raids on NZ's Rubicon and investments in Australian companies such as GUD Holdings.

GPG would probably have enough cash to fund a bid if it was to go that far, given that at June 30 it reported cash in the bank of #136 million ($380 million), compared with Tower's market capitalisation of $328 million yesterday.

Other candidates include Royal & Sun Alliance, which has reportedly been considering a bid for Tower once it floats on the Australian Stock Exchange in a deal scheduled for the first half of 2003.

But only a few months ago, before it had taken the float path, RSA had tried to sell its Australasian financial services operations to Tower in a deal that ultimately failed.

And RSA is likely to be keen to promote the float as primarily a general insurance, rather than life insurance, business.

GPG has a history with both companies, having been a former owner of RSA's funds management and life arm, Tyndall, while GPG also tried to convince Tower's policyholders to merge with Tyndall before Tower's demutualisation in 1999.

Tyndall was then headed by Mike Wilkins, now RSA's chief executive. Mr Wilkins also was not available for comment.

One fund manager said: ``Both companies [Tower and RSA] would have certain strengths in terms of their master trust and funds management activities and neither are regarded as leader. They would perhaps end up being gobbled up themselves [if they don't merge]."

GPG's style is to take stakes in battered companies and agitate for change, either via board and management changes or a takeover bid, either by itself or a third party.

Other bidders might be AXA Asia Pacific, Suncorp-Metway and ANZ, but given Tower has just reported a $NZ75 million ($68 million) loss and there are question marks over its financial strength, launching a hostile takeover bid without some due diligence might seem brave.

Last year Tower suffered a series of writedowns, mainly related to its Australian life operations and its financial planning arm, Bridges.