GPG lifts Tower stake to 35%; Gibbs Cautious on outlook

Jonathan Underhill

Wednesday 18th June 2008

Guinness Peat Group succeeded in lifting its Tower Ltd. stake to 35% while saying it is `cautious' about the outlook for the insurer's earnings growth.

"We're hoping it will continue to grow," GPG New Zealand director and Tower Chairman Tony Gibbs said in an interview. Still, "equity markets are all over the place, interest rates are high - for Tower it is steady as she goes."

Holders of about 17.6% of Tower shares have accepted GPG's NZ$2.30 apiece offer, exceeding the 15.3% minimum acceptance required, Tower said in a statement today. On the question of allowing GPG to make the offer, 91.5% of the 40.16 million shares voted so far are in favour.

Shareholders have rallied behind the proposal even after it failed to win endorsement from Tower's directors because the price was below a Grant Samuel valuation range of NZ$2.45 to NZ$2.89. The shares traded today unchanged at NZ$2.16 and GPG fell 1.9% to NZ$1.52.

GPG "has got more than the number of shares needed'' to raise its holding from 19.7%, Eric O'Sullivan, Tower's company secretary, said from Auckland. It is ``very unlikely'' the position will change before the offer formally closes at 7 p.m. tomorrow, he said.

The diversified investment group founded by Ron Brierley steered Tower's profitable decision to split off its Australian operations, resulting in a one-time gain last year. Today, Gibbs said GPG doesn't plan to increase it stake again any time soon.

Tower posted a 29% gain in first-half profit from continuing operations to NZ$20.2 million.

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