GPG builds up stake in Tower

GPG confirmed to the New Zealand Stock Exchange yesterday that it now held 17.5 million shares or 9.93 per cent of Tower, a stake worth $33.95 million at yesterday's close of $1.94, up 3c. The disclosure followed a frenetic day of trading when more than 9 million shares were traded on the New Zealand exchange.

Another 7.4 million were traded through the Australian market.

GPG was keeping a low profile but it is seen as unlikely that GPG will make a full takeover bid for now.

One possibility is that GPG will initially press for at least one board seat, giving it a better opportunity to make an assessment on the value of the company and conduct some due diligence. GPG is also limited by a 10 per cent shareholder cap, which ends later this year.

Several directors, including chairman Colin Beyer, are up for re-election at the annual meeting late next month and it is understood at least one individual shareholder has put forward a proposal that the entire board resign.

It is unclear whether GPG will put forward any resolution of its own.

Meanwhile, Greg Martin of KPMG is conducting an independent actuarial review of Tower on behalf of the Australian Prudential Regulation Authority, which last month sought the review to satisfy market and regulatory concerns about the group.

Tower had earlier agreed to top up its surplus assets by $30 million after weak equity markets and bad results saw the surplus run down.

While Tower is seen as a potential takeover target, there is no shortage of other insurance groups in the region either officially or reputedly up for sale or seeking capital. GPG previously tried to merge Tower with its Tyndall unit, but it no longer owns the latter, having sold it to Royal & SunAlliance.