The Tower Limited (Australia) (ASX: TWR) share price looks set to surge higher this morning after the insurer revealed that it has received a new takeover offer.
Suncorp Group Ltd (ASX: SUN) has confirmed that its wholly owned subsidiary Vero Insurance New Zealand has acquired 11.14% of Tower's shares with a view to escalating the offer to 100% of all shares.
According to the release a non-binding indicative proposal has been submitted to the Tower board outlining Suncorp's interest in acquiring the residual 88.86% of ordinary shares at a price of NZ$1.30 per share.
This follows an announcement on February 9 that revealed that Fairfax Financial Holdings Limited offered to purchase 100% of Tower shares at NZ$1.17 per share.
What's next?
Even at NZ$1.30 a share the offer is some distance from its 52-week high and would be a bit of a bargain for Suncorp in my opinion.
Because of this I wouldn't be too surprised to see Fairfax Financial Holdings come back with a better offer.
But whilst that would be great for shareholders, I would caution against buying shares purely in the hope of a bidding war breaking out. There's no guarantee that Fairfax Financial will return with a new offer, nor is there a guarantee that either offer will complete successfully after due diligence.
The Tower board has advised that its focus at this point is to optimise value for shareholders. It plans to review and evaluate all available options.
In the meantime it has strongly advised that shareholders not take any action without carefully assessing all available information.
