The company's unfranked dividend yield was already running at a generous 7.4% according to the ASX website; however, the company is looking like an even stronger dividend play after Thursday's announcement.

Good numbers across the board

Tower said in a statement to the ASX that its underlying profit came in at a record NZ$107.2 million, up from $NZ$83.5 million the previous year, while net profit was NZ$83.7 million, up from NZ$74.3 million.

The company said the board had considered the strong financial results and decided to pay a final dividend of NZ16.5 cents, up from NZ6.5 cents for the same period the previous year.

Tower Chief Executive Officer Paul Johnston said the company had performed well:

This is an exceptional result, underpinned by Tower's transformation, driven by investment in our digital platform and continued focus on underwriting discipline, technology, data, and efficiency. These actions demonstrate Tower's commitment to delivering sustainable growth and building a resilient, customer-focused business for the future.

There was a caveat, however, with Mr Johnston saying that the company expected the conditions which underpinned the record results, including relatively benign weather, to normalise in the current financial year.

The company said it had increased its customer base 4% over the year to 318,000, with home insurance policies up 11%.

Cautious forecast on profit going forward

Tower said it expected its full-year results for the current year to drop back to be in the range of NZ$55 million to NZ$65 million, "assuming full utilisation of an updated NZ$45m large events allowance''.

The company said on Thursday that there were only two large events in FY25, which meant it only incurred NZ$7.2 million in large events costs, "allowing us to return NZ$30.8m after tax of our large events allowance to underlying NPAT".

The company went on to say:

Benign weather, together with lower motor claims and prior-year targeted underwriting actions – such as tightening our risk appetite for high-theft-risk vehicles – also contributed to a reduction in NZ business-as-usual claims, from 57,783 in FY24 to 56,825 in FY25, while customers and policy count grew in the year. While policy and customer volumes have continued to grow, average premiums have reduced. This is due to a higher proportion of lower-risk new policies, consistent with Tower's risk-based pricing approach, and more competitive pricing in the New Zealand market.

Tower's ex dividend date has been set for 14 January, with the dividend to be paid on 29 January.

The post This insurance company has more than doubled its final dividend on record results appeared first on The Motley Fool Australia.

Four ASX shares that are rising more than most today are listed below. Here's why they are climbing:

DroneShield Ltd (ASX: DRO)

The DroneShield share price is up 5% to $3.23. This is despite there being no news out of the counterdrone technology company. However, with its shares pulling back meaningfully in recent weeks, some investors may believe a buying opportunity has opened up. In addition, some investors may think that rising tensions in the Middle East could lead to increased demand for its products in the near term.

Select Harvests Ltd (ASX: SHV)

The Select Harvests share price is up 10% to $4.25. This may have been driven by the release of a bullish broker note out of Bell Potter this morning. According to the note, the broker has reaffirmed its buy rating on the almond producer's shares with an improved price target of $5.45. Commenting on its buy recommendation, the broker said: "Buy rating is unchanged. Volatility in almond pricing has been a feature since May'25. However, the long-term under development of orchards in California implies a period of limited supply expansion potential, which we view as a positive for the direction of future almond pricing trends. Trading at ~7% discount to market NAV, ~5.9x FY26e "spot price" EBITDA and ~9.3x FY26e "spot price" PER (@29kt production), valuation is undemanding, particularly if pricing continues to firm."

Tower Ltd (ASX: TWR)

The Tower share price is up almost 10% to $1.58. The catalyst for this has been news that the insurance company has updated its guidance for FY 2025. Tower's underlying net profit after tax is now expected to be in the range of between NZ$100 million to NZ$110 million, provided that no large events are recorded in September. Its previous guidance was for underlying net profit after tax of between NZ$70 million and NZ$80 million.

Ventia Services Group Ltd (ASX: VNT)

The Ventia Services share price is up 5% to $5.29. This morning, this essential infrastructure services provider announced the extension of its Facility Management Agreement with the City of Sydney, valued at approximately $100 million over two years. This extension will commence on 22 January 2026 and continue through to 21 January 2028. Management believes it reinforces the City of Sydney's continued confidence in Ventia's ability to deliver high-quality, data driven and strategic asset management services across its diverse asset portfolio.

The post Why DroneShield, Select Harvests, Tower, and Ventia shares are roaring higher appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

HMC Capital Ltd (ASX: HMC)

The HMC Capital share price is down almost 4% to $6.00. This morning, the investment company revealed that it expects to receive a ~$150m distribution from HMCCP Fund I following the realisation of substantial profit from portfolio investments in Sigma Healthcare Ltd (ASX: SIG) and Ingenia Communities Group (ASX: INA). It also provided a trading update and revealed that FY 2025 operating EPS (pre-tax) is currently tracking at 70 cents. As a result, its dividend per share guidance of 12 cents has been reaffirmed.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down a further 5.5% to $1.59. Investors have been selling this lithium miner's shares amid concerns over lithium prices and the impact they could have on profitability. It isn't just Pilbara Minerals shares that are falling today. A number of lithium miners are down in the low to mid-single digits as selling intensifies. The Pilbara Minerals share price is now down approximately 60% since this time last year.

Strickland Metals Ltd (ASX: STK)

The Strickland Metals share price is down 9% to 10 cents. This follows the release of an update on the mineral resource estimate for its Shanac gold-copper project. According to the release, the mineral resource estimate is 150Mt @ 1.1g/t AuEq for 5.30Moz. It seems that the market was expecting a stronger result. Though, the mineralisation is open along strike and at depth. As a result, management believes there could be upside to this estimate. In fact, it highlights that high-grade, gold-only intercepts to the north of the current resource footprint have not been followed up.

Tower Ltd (ASX: TWR)

The Tower share price is down over 10% to $1.21. This has been driven by news that Bain Capital is selling down its holding in full. The release states: "Tower Limited has received confirmation from Bain Capital that the full shareholding of 68,306,802 shares in Tower (held by Dent Issuer Designated Activity Company) has been allocated to investors as further set out in its substantial product holder notice dated 1 April 2025."

The post Why HMC Capital, Pilbara Minerals, Strickland Metals, and Tower shares are falling today appeared first on The Motley Fool Australia.

Four ASX shares that are not letting that hold them back today are listed below. Here's why they are rising:

Arizona Lithium Ltd (ASX: AZL)

The Arizona Lithium share price is up 9% to 2.4 cents. This morning, this lithium explorer announced that it has received approval from the US Bureau of Land Management for the Permit of Exploration (POE) at the Big Sandy Lithium Project in Arizona, USA. This POE includes 131 exploration holes and a bulk sample. Arizona Lithium's managing director, Paul Lloyd, commented: "This represents a substantial development opportunity for a deposit that presently contains a JORC resource of 320,800 tonnes LCE. With only 4% of the project drilled to date, we are looking to expand the existing Resource and validate the exploration target."

Bapcor Ltd (ASX: BAP)

The Bapcor share price is up 13% to $4.93. This follows confirmation that the auto parts retailer has received an unsolicited, indicative, conditional and non-binding takeover proposal from Bain Capital. Under the terms of the indicative proposal, Bapcor shareholders would receive $5.40 cash per share from the private equity giant. The Bapcor board is currently considering the offer and has warned that "there is no guarantee that the Indicative Proposal put forward by Bain Capital will result in a binding offer or that any transaction will eventuate."

Race Oncology Ltd (ASX: RAC)

The Race Oncology share price is up 3% to $1.84. This morning, this oncology company announced that the United States Food and Drug Administration (FDA) has extended Orphan Drug Designation (ODD) to its proprietary formulation of bisantrene, RC220. The ODD provides a wide range of benefits to sponsors of new treatments for orphan diseases. This includes seven-year US marketing exclusivity for approved orphan products. The company's chief medical officer, Dr Michelle Rashford, said: "Orphan Drug Designation is a major asset beyond AML as it enables Race to work closely and constructively with the FDA on all of our RC220 bisantrene clinical programs as we progress towards opening an FDA IND in 2025."

Tower Ltd (ASX: TWR)

The Tower share price is up 4% to 80 cents. This follows a guidance upgrade from the New Zealand based insurer. It now expects its underlying net profit after tax for the 12 months ending 30 September to be greater than NZ$40 million. This is up from its previous guidance for greater than $35 million. This increase is due to a continuation of positive trading conditions including unseasonably benign weather in the past two months.

The post Why Arizona Lithium, Bapcor, Race Oncology, and Tower shares are pushing higher appeared first on The Motley Fool Australia.

Johns Lyng is a fairly unique business on the ASX, so there's not really a direct comparison. The core business is built on its ability to rebuild and restore a variety of properties and contents after damage by insured events like impact, weather and fire events.

Its client base includes major insurance companies, commercial enterprises, local and state governments, body corporates/owners' corporations and households.

Brickworks is best known as a leading brickmaker, though it also produces several other building products.

Expanding business operations

I think both Johns Lyng and Brickworks have benefited significantly from growing beyond their original/core operations.

In 1950, Brickworks gained total control of Austral Bricks, making it the biggest and most powerful single brickmaking company in Australia. Since then, it has expanded its building products portfolio into several other areas, including masonry and stone, roofing, specialised building systems, cement, and timber.

Brickworks is also benefiting from owning a growing portfolio of impressive industrial warehouses/properties.

Johns Lyng is also doing a great job of growing. It is building exposure to disaster recovery work, with catastrophe events continuing to exhibit "large and more enduring characteristics".

In addition, the company is growing in strata building and management services, as well as essential property repairs, maintenance and compliance services (including fire, gas and electricity).

Each of those additional earnings areas gives the ASX stock a very useful growth avenue where there is room for both organic growth and acquisitions.

Growing geographically

A few years ago, Brickworks took the exciting decision to expand its geographic presence to the United States with a few acquisitions in the world's biggest economy. It's still early days in the country, but there's great potential for Brickworks to replicate its Australian success in the US.

Johns Lyng has also expanded into and is growing in the US. It was recently chosen by Allstate, one of the largest insurance companies in the US, to join its emergency response and mitigation panel.

The ASX stock recently expanded into New Zealand and has made an agreement to provide repair services to Tower Ltd (ASX: TWR) as part of its New Zealand panel.

Long-term focus

Brickworks isn't trying to maximise short-term profits; its mission is to do what is right for the company's long-term sustainability and profitability.

I think that's the best strategy for long-term shareholders. For example, in the recent FY24 first-half result, Brickworks advised there would be a series of plant closures in the second half of FY24 to undertake maintenance and control inventory.

Brickworks is always considering how best to use its assets, including its large property portfolio of land and buildings.

Johns Lyng is smart in thinking about how to utilise synergies between the core business, strata management, and essential property services. Each segment can provide good, defensive earnings to John Lyng separately, but together, they could be a powerful combination.

Foolish takeaway

The Johns Lyng share price has dropped 22% since 26 February 2024. I think this is a great opportunity to invest in a growing business with increasing profit margins. Once Fool's trading rules allow me to, I'm thinking about adding more Johns Lyng shares to my portfolio.

The post 1 ASX stock to consider buying that could be the next Brickworks appeared first on The Motley Fool Australia.

An explanation for the ex-dividend date is when investors must have purchased a company's shares. Let's say you buy XYZ shares on or after the ex-dividend date, then the upcoming dividend will go to the seller.

Below, we take a look at the three small-cap shares that are trading ex-dividend next week.

Which ASX shares are going ex-dividend?

KMD Brands Ltd (ASX: KMD) shares will trade ex-dividend next Tuesday for the adventure retailer's NZ$0.03 cents (A$0.027) per share fully franked dividend. This will be paid to eligible shareholders on 30 June. The KMD Brands share price closed down 3.67% at $1.05 on Friday.

Plato Income Maximiser Ltd (ASX: PL8) shares are set to trade without the rights to the investment company's $0.0055 cent per share fully franked dividend on Wednesday. Shareholders will have to wait until 30 June for their paycheck. Plato shares closed 1.25% higher on Friday at $1.215.

Tower Ltd (ASX: TWR) shares will also trade ex-dividend next Wednesday for the New Zealand-based insurer's NZ$0.025 cents (AS0.023) per share unfranked interim dividend. Eligible Tower shareholders can expect to be paid this dividend on 30 June. The Tower share price closed in the green on Friday, up 1.67% to 61 cents.

It is worth noting that, commonly, the share price of a company drops on the ex-dividend date by the amount of the dividend that is paid to shareholders. 

Foolish Takeaway

To qualify for any of these dividends you need to make sure you are on the share registry before the ex-dividend date. Again, this is either Tuesday or Wednesday, depending on which ASX share you buy.

It's worth noting that if you sell on or after the ex-dividend date, you will still qualify for the dividend.

The post 3 ASX shares going ex-dividend next week appeared first on The Motley Fool Australia.

Let's take a closer look at the New Zealand-based insurer and what's driving the Tower share price higher today.

Settlement reached

Tower said it had settled with EQC for $42.1 million, with the funds including disbursement to reinsurers and costs.

The company advised that the write-off of the residual amount would impact its FY20 reported net profit by $9.5 million. The additional funds will further strengthen its capital position moving forward into FY21.

Pleasingly for Tower, the settlement amounted to 76% of the gross carrying value listed in its accounts. Tower will provide an update on dividend payments with its FY20 results to be released tomorrow.

What did management say?

Commenting on the agreement, Tower chief executive Sid Miller said:

The series of earthquakes suffered by the Canterbury region caused a number of complexities in allocating building and land damage and the cost of repair between different earthquake events. This settlement is a significant milestone for EQC in our Canterbury Earthquake recovery program.

Tower chair Michael Stiassny, added:

The Canterbury earthquakes remain a significant event in New Zealand's history and will have a lasting impact on the community. For Tower, this legacy resulted in distractions that have been progressively removed over the years and it is important we provide the management team with clear air to move the business forward and accelerate.

The board determined that reaching this settlement agreement dealt with any remaining unpredictability and gave certainty to our shareholders, who will be pleased to see this risk removed from our business.

Tower share price summary

The Tower share price has had a challenging 2020, falling from its multi-year high of 74.5 cents in December 2019 to today's price of 58.5 cents. This represents a decline of 21%.

The post Why the Tower (ASX:TWR) share price is up 4% today appeared first on The Motley Fool Australia.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) higher 0.64% to 6.733.50
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) higher 0.66% to 6,855.20
• AUD/USD at US 70 cents
• Gold at US$1,540.63 an ounce
• Brent Oil at US$68.38 a barrel

One of the best-performing ASX 200 shares today was the Northern Star Resources Ltd (ASX: NST) share price, it went up 5.8% after completing its acquisition of 50% of KCGM Super Pit.

Other gold miners were also some of today's top performers including Silver Lake Resources Limited. (ASX: SLR) which went up around 4.5%. However, the worst performer in the ASX 200 was also a gold miner, the Evolution Mining Ltd (ASX: EVN) share price dropped 2.1%.

Insurance Australia Group Ltd (ASX: IAG) saw its share price go up 0.4% after providing an update about its catastrophe reinsurance for 2020 and giving a perils update.

The share price of Sezzle Inc (ASX: SZL) dropped a further 15.7% today on troubles with its California license application. Fellow buy now, pay later business Afterpay Touch Group Ltd (ASX: APT) also saw its share price drop 1.2%.

The Costa Group Holdings Ltd (ASX: CGC) share price dropped 0.8% after it was announced that the bushfires has caused a bit of damage to packing equipment and several vehicles at a farm.

Finally, the share price of TOWER Limited (ASX: TWR) went up 0.75% after completing the acquisition of Youi NZ's insurance portfolio.

Here are some of today's top stories:    

• This is where I'd invest $1,000 right now into shares
• How will ASX shares be impacted by bushfires and drought?
• Fund managers have been buying Altium and this ASX share
• 3 ASX tech shares paying dividends

The post ALL ORDINARIES finishes higher Friday: 8 ASX shares you missed appeared first on The Motley Fool Australia.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) lower 0.34% to 6.706.90
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) lower 0.39% to 6,812.10
• AUD/USD at US 68 cents
• Gold at US$1,462.02 an ounce
• Brent Oil at US$64.13 a barrel

One of the best-performing ASX 200 shares today was the Speedcast International Ltd (ASX: SDA) share price which rose almost 5%.

Some investors saw an opportunity after the sell-off, sending the share price of A2 Milk Company Ltd (ASX: A2M) up 3.4%.

The trading update yesterday has sent the Estia Health Ltd (ASX: EHE) share price down by 2.8% today.

The share price of TOWER Limited (ASX: TWR) fell 5.5% after announcing the commencement of a search for a new CEO.

An ASX presentation sent the Select Harvests Limited (ASX: SHV) share price up another 1.8%.

WiseTech Global Ltd (ASX: WTC) announced the acquisition of a South Korean business today, sending the share price down 1.3%.

The share price Centuria Metropolitan REIT (ASX: CMA) didn't move as it went into a trading halt for a capital raising to fund an acquisition.

Finally, the share price of Cooper Energy Ltd. (ASX: COE) climbed 1.8% after announcing a Sole Gas Project update.

Here are some of today's top stories:    

• Morgan Stanley warns this big bank will cut dividend and raise capital in 2020
• 5 top ASX dividend shares investors should never sell
• 10 ASX large caps to buy for 2020
• Why I would buy these quality ETFs for 2020

The post ALL ORDINARIES finishes lower Tuesday: 8 ASX shares you missed appeared first on The Motley Fool Australia.

Four shares that have fallen more than most today are listed below. Here's why they are sinking lower:

The Cann Group Ltd (ASX: CAN) share price has continued its slide and is down a further 6% to 38.5 cents. At one stage today the cannabis company's shares hit a record low of 37.5 cents. When they reached that level it meant they were down over 81% since the start of the year. The market appears concerned with Cann's prospects due to an oversupply of cannabis.

The Novonix Ltd (ASX: NVX) share price has fallen 5.5% to 59.5 cents. This is despite the company announcing on Monday that it has signed a conditional agreement to supply lithium-ion battery anode material to Samsung SDI. It is a South Korea-based an international manufacturer of lithium-ion batteries. In response to this news, this morning Morgans upgraded its shares to a speculative buy with a 90 cents price target.

The Paradigm Biopharmaceuticals Ltd (ASX: PAR) share price is down 4.5% to $3.41 despite there being no news out of the biopharmaceuticals company. However, its shares have been on fire in 2019. So, this decline could be due to profit taking from some investors. Prior to today, Paradigm's shares were up 260% since the start of the year.

The TOWER Limited (ASX: TWR) share price has fallen almost 3% to 71 cents. This follows the announcement that the New Zealand-based insurance company's CEO, Richard Harding, will not be extending his contract. He intends to exit the role in 2020 and return to Australia. The Tower board has now started a global search for a new CEO and will consider internal applicants.

The post Why Cann, Novonix, Paradigm, & Tower shares are sinking lower appeared first on The Motley Fool Australia.

Here's a quick recap:

• FTSE 100 (UK): down 0.24%
• DAX (Germany): down 0.4%
• CAC 40 (France): down 0.73%
• Dow Jones (USA): up 0.07%
• NASDAQ (USA): up 0.1%

The Tower Limited (Australia) (ASX: TWR) share price is likely to come under pressure today. The company's New Zealand-listed shares are trading nearly 16% lower at the time of writing after the company reported its full-year results (a loss after tax of $8 million) and a capital raising.

Ruralco Holdings Ltd (ASX: RHL) reported its full-year results to the market, as well, with revenue rising 2% and underlying net profit after tax up 95% to $26.2 million.

And Incitec Pivot Ltd (ASX: IPL) reported a 17% increase in earnings before interest and tax (EBIT) to $501.2 million, while net profit rose 8% to $318.7 million.

Meanwhile, Sirtex Medical Limited (ASX: SRX) provided a trading update for the first quarter of financial year 2018, saying that worldwide dose sales were flat versus the pror corresponding period. Reported sales revenue for the period was down 4.8%, partially due to currency headwinds, although its unaudited constant currency profit before tax was up 11.3%.

The post 4 shares you need to watch on Tuesday appeared first on The Motley Fool Australia.

The New Zealand Commerce Commission (NZCC) blocked Vero's takeover bid for Tower because it would lessen competition in the New Zealand market, which is dominated by Suncorp and Insurance Australia Group Ltd (ASX: IAG). They believe that:

"The merger would eliminate Tower as the competitor best placed to disrupt coordination, and leave two reasonably symmetric insurers with incentives to coordinate."

Tower and Vero are appealing the decision, but based on this sentence alone I think there is no way the merger goes ahead – which places Tower in a tough position. It either needs previous bidder Fairfax (of Canada) to return to the fray, or Tower will undoubtedly have to raise capital. This is because the company's Canterbury earthquake liabilities have placed its solvency under stress:

Increases in provisions forced Tower to borrow $30 million in debt to maintain its solvency position. The Canterbury liabilities could conceivably increase again, requiring Tower to take on more debt, or raise capital.

In addition to this, Tower is stuck with an antiquated IT system and labour-intensive insurance sales system (online sales are just 24% of sales) that is at least partly responsible for the group's high costs.

If Tower doesn't raise capital, it will still face the expense of upgrading its IT systems, which will likely be unaffordable. The IT upgrade is currently on hold while the bidding process has been taking place, but as I see it Tower has two options:

• It gets taken over, or
• It has to raise capital, potentially quite a lot of capital, if it stays listed and also wants to fund its IT system upgrade

It probably doesn't make sense for Tower to stay listed as it is quite small and expenses chew up a significant chunk of its earnings. However, with its NZ competitors (the natural buyers) likely unable to acquire it, Tower either needs a foreign bidder or a capital raising. I would prefer the latter, as I think Tower is a well-run company with a lot of potential, and I have owned shares previously. I'd like to buy shares again, and would likely participate in a capital raising. However for now, I'm waiting for more clarity before making a decision.

The post Why Tower Insurance Limited needs to raise capital appeared first on The Motley Fool Australia.

Unfortunately not all shares have been able to follow the market higher today. Four shares in particular have stood out with notably sharp declines. Here's why they are lower:

The Domino's Pizza Enterprises Ltd. (ASX: DMP) share price has fallen 5% to $55.07 following the release of its parent company's second-quarter result. Although the US-based Domino's beat expectations on both the top and bottom line, its shares fell sharply due to a weaker-than-expected result from its international business. However, it is worth noting that the performance of the Asia-Pacific region was a highlight, which could mean today's decline from the Australian Domino's is a bit of an overreaction.

The Independence Group NL (ASX: IGO) share price has fallen 4.5% to $3.14 following the release of the miner's latest quarterly update. Although revenue increased to $114 million during the quarter, the company posted an unaudited net loss after tax of $15.5 million. Further to this, Independence's all-in sustaining cost rose to A$1,286 an ounce at its Tropicana site.

The Super Retail Group Ltd (ASX: SUL) share price has given back yesterday's gains and is down 2% to $8.43. Today's decline is likely to be in relation to a research note out of Credit Suisse this morning that revealed that its analysts have downgraded the retail group to an underperform rating with a $7.50 price target. The investment bank appears to be bearish on the future prospects of its sports segment, believing margins will shrink more than the company has forecast.

The Tower Limited (Australia) (ASX: TWR) share price has plunged a whopping 26% to 87.5 cents. This morning the New Zealand Commerce Commission blocked the takeover of Tower by Vero Insurance New Zealand, a wholly owned subsidiary of Suncorp Group Ltd (ASX: SUN). No detailed reasons have been given by regulators as of yet, but it appears likely that there are concerns it will lessen competition in the New Zealand insurance market.

The post Why these 4 ASX shares have sunk lower today appeared first on The Motley Fool Australia.

Suncorp subsidiary Vero Insurance New Zealand Limited began acquiring shares in Tower in February this year, before making a 100% takeover offer for all of Tower's shares shortly after.

In June, Vero updated its proposal to acquire all the shares in Tower Limited it didn't already hold at NZ$1.40 per share. At the time, Vero advised that it had received clearance under the New Zealand Overseas Investment Act consent, and completed due diligence. Vero still needed NZCC clearance, which it now doesn't have.

Suncorp says it is disappointed by the NZCC's decision, with Suncorp NZ CEO, Paul Smeaton saying that he didn't believe that the acquisition would substantially lessen competition in the New Zealand insurance market. Newspaper reports suggest the acquisition would increase Suncorp's market share by 5% to 30%.

Insurance Australia Group Ltd (ASX: IAG) is New Zealand's largest general insurer with an estimated 46% market share, with Suncorp subsidiary Vero reportedly the second-largest.

Tower terminated an agreement with Canada's Fairfax Financial Holdings at the end of June 2017, but it's not known if the company known as Canada's Berkshire Hathaway will come back for a second bite at Tower.

The post Why the Tower Limited (Australia) share price was crushed today appeared first on The Motley Fool Australia.

In morning trade the insurance company's shares are down a massive 25% to 89.1 cents.

Why have its shares crashed?

This morning it was announced that the New Zealand Commerce Commission has declined the application of Vero Insurance New Zealand, a wholly owned subsidiary of Suncorp Group Ltd (ASX: SUN), to acquire Tower.

Vero had planned to acquire Tower for NZ$1.40 per share, outbidding Fairfax Financial Holdings Limited offer of NZ$1.17 per share.

Although the two parties are still awaiting for full details to be released by the Commerce Commission to fully understand the reasoning behind the decision, I feel regulators may have concerns that it will lessen competition in the New Zealand insurance market.

What's next?

Both Suncorp and Tower plan to review the decision before commenting further.

However, Tower has warned shareholders that should the acquisition fall through it will have to consider the impact it will have on its business plans.

This includes whether it needs to conduct a capital raise to ensure the long-term sustainability of the business and accelerate its transformation.

Should you invest?

Whilst its shares may look a lot cheaper today, I would stay clear of Tower for the time being.

Especially with the prospect of a capital raising on the horizon potentially putting further pressure on its shares.

When the dust settles it may well be worth considering, but for now I would prefer to gain exposure to the insurance sector with either Suncorp or Freedom Insurance Group Ltd (ASX: FIG).

The post What next for Tower Limited (Australia) after share price plunges appeared first on The Motley Fool Australia.

Although Tower had made progress towards clearing up the last of its Canterbury earthquake liabilities, last week's report suggests that my original assumption for no further provisions being taken was wrong.

As a result, Tower is more likely to have to raise capital than I'd originally thought (if there was no takeover offer). The increase in provisions also led to continued suspension of the dividend. Although this is a good thing for shareholders, the increase in provisions and likelihood of the dividend remaining suspended for longer measurably reduces the expected returns from the investment, at least in the near term.

On the plus side, Tower continues to make pleasing progress both in growing its insurance sales and reducing costs, and I would be happy to hold the business for another couple of years to see how it played out.

But you just said you sold your shares?

I did. As it stands, I see three likely outcomes:

• The current takeover bid goes ahead at today's prices. I would have to wait until after June and for a subsequent shareholder vote to be called for that to happen. There is zero upside in this situation.
• The Suncorp bid gets approval from the regulator and is voted for by shareholders. In that case my shares would be worth ~10% more, if the bid is approved. NZ's competition regulator is not shy about saying 'No' and recently rejected Sky Network Television Ltd's (ASX: SKT) bid to merge with Vodafone NZ.
• Both takeover bids fall through for whatever reason and shares plunge

I think the company is quite clearly undervalued, given its clear strategy for improving its performance, but as things stand there appears to be little benefit in continuing to hold the shares.

The post Why I just sold my shares in Tower Insurance Ltd appeared first on The Motley Fool Australia.

Here's a quick recap:

• FTSE 100 (UK): down 0.15%
• DAX (Germany): up 0.31%
• CAC 40 (France): up 0.47%
• Dow Jones (USA): up 0.21%
• NASDAQ (USA): up 0.08%

The BHP Billiton Limited (ASX: BHP) share price will be in focus today following reports in The Australian Financial Review that the miner has engaged Barclays to divest its US Fayetteville shale gas assets. The group's London-listed shares fell 0.64% overnight, compared to a 0.1% fall for Rio Tinto Limited's (ASX: RIO) London stock.

G8 Education Ltd (ASX: GEM) is expected to emerge from an extended trading halt today. The group announced yesterday it would raise $100 million via an institutional placement to reduce debt and fund growth opportunities. However, this only came after another binding agreement with an investor to raise $149 million fell through; that investor has now agreed to contribute just $31.8 million, bringing the total to be raised by G8 to $131.8 million.

Insurance business Tower Limited (Australia) (ASX: TWR) reported a loss of $8.2 million for the half-year period, impacted by events such as the Kaikoura earthquake and the Tasman Tempest storms. It did, however, manage to reduce its management expenses by $2.6 million compared to the prior corresponding period.

Automotive Solutions Group Ltd (ASX: 4WD) has responded to a takeover offer by AMA Group Ltd (ASX: AMA), advising shareholders to take no action.

And the banks could be in focus again today. Each of the banks ended yesterday's session in the red after providing the market with estimates regarding how they expect to be impacted by the Federal Government's bank levy. The Westpac Banking Corp (ASX: WBC) share price fell a little over 1%.

Before getting started on your day, be sure to check out these two articles:

1. Here's How Much the Bank Levy Will Cost Commonwealth Bank of Australia
2. Revealed: 3 dividend shares with yields over 5%

The post S&P/ASX 200 open Wednesday: 7 shares you need to watch today appeared first on The Motley Fool Australia.

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.

The post Has Suncorp Group Ltd started a bidding war for Tower Limited (Australia)? appeared first on The Motley Fool Australia.

That's harder in Australia because our market is so small, and there are plenty of fund managers that buy small-cap stocks. However, one guaranteed way for small investors to get an edge over the experts is by buying illiquid companies – where only a tiny volume of shares are traded each day.

It can be tough, if not downright impossible, for even smaller funds to build an adequate position in a company when only $30,000 worth of shares change hands each day. Here are four companies that could fit the criteria:

Tower Limited (Australia) (ASX: TWR)

A small New Zealand insurer that has been through some tough times recently, most of the value is now gone from Tower shares due to the recent takeover offer that was made for the company.  However for a few months the company was a clear opportunity for small buyers, with only a few thousand dollars worth of shares traded each day.

CBL Corp FPO NZX (ASX: CBL)

A recently-listed Kiwi insurer that contributor Ed Vesely identified as his top stock pick for October last year. Following some research, I have decided that I also like CBL a lot. Management and the board own more than 50% of the company between them, and niche products combined with a high level of profitability compared to regular insurers make the company worth a closer look. A number of NZ fundies also like CBL, but with just ~10,000 shares changing hands each day, they'll struggle to build a position.

Macquarie Media Ltd (ASX: MRN)

An Australian value investing fund manager recently wrote about this radio station and media company, and identified it as a possible opportunity that was too illiquid for them to build a stake – again due to very high stakes held by major shareholders. I haven't looked at Macquarie Media myself, but it is another reminder that unique opportunities are out there for household investors which are largely unavailable to fund managers.

Reject Shop Ltd (ASX: TRS)

Unlike the above companies, plenty of Australian funds own Reject Shop, as it is part of the S&P/ASX300 (INDEXASX: ^AXKO) (ASX: XKO) index. However, there are only 29 million shares on issue, which can lead to volatility and price swings – especially when fund managers are forced to sell as we saw in 2015. The patient investor can use these to their advantage, and the company looks interesting at today's prices.

Foolish takeaway

Of course, just because a company is illiquid doesn't mean that you should own it. There are additional dangers for the household investor, especially if they sell in a hurry as there is no guarantee that there will be a market for their shares. Bad news can also have a disproportionately more severe impact on the share price, given that there are fewer buyers and sellers must discount further in order to achieve a sale. However for the patient and the risk-tolerant, illiquid companies can provide unique opportunities that aren't available to many fund managers.

The post How to beat the fund managers with these 4 share ideas appeared first on The Motley Fool Australia.

Fairfax has offered to acquire Tower for a cash proposal of NZ$1.17 per share, a 47% premium to the company's Volume-Weighted Average Price (VWAP) over the past three months. The board has unanimously recommended the proposal in the absence of a superior offer.

Shareholders do not have to take any action just yet, and there will be a special meeting of shareholders in April in order to vote on the takeover.

The takeover must be approved by more than 50% of total voting rights of the company. So far, two significant shareholders, Salt Funds Management and Accident Compensation Corporation (ACC) (which hold a combined 18.1% of the company) have given a firm indication that they will vote in favour of the proposal.

A good deal for shareholders?

To my mind, the takeover bid materially undervalues Tower. The biggest indication of this is Fairfax's (a large Canadian insurer) assertion that it will keep CEO Richard Harding running the business. Fairfax does not have a significant presence in the NZ/ Pacific Island region, and thus is not looking to assimilate a small competitor into its own larger organisation. Rather, it is seeking a platform to grow and expand in the region, and Tower is in a good position to do that. I think it is a great opportunity for the buyer, but not so much for the sellers (Tower shareholders).

Tower earned NZ$20 million in underlying profit last year, meaning that today's takeover bid values the company at about 10 times last year's earnings. However, as I noted in my coverage of Tower's results, the company has a large amount of low-hanging fruit that it can pick to improve its operations. This chart in particular appears to show a turnaround in the NZ business that began under Richard Harding:

There are many things that can affect underlying profit, but the positive signs are all there – improving customer retention, solid premium growth, a good balance sheet with NZ$0.96 in Net Tangible Assets (NTA) per share, predominantly cash and investments, as of 30 September 2016 (this is pre-Kaikoura earthquake).

Tower also temporarily suspended its dividend while it planned the proposed formation of 'Run-Off Co', and the new owner will soon be in line for something like a 7% dividend at today's prices.

Now what?

The one positive to the takeover offer is that it ameliorates the uncertainty of the proposed capital raising and formation of Run-Off Co, which will now not occur unless the takeover falls through. That means that investors don't have to deal with a capital raising and the hard-to-quantify Canterbury liabilities. In my opinion, investors who are deeply uncomfortable with the Canterbury liabilities could consider taking advantage of the bid, and selling their shares today for close to the takeover price of $1.17.

However, in the main, I think that Tower's board and major shareholders Salt Funds and ACC have been too quick to fold their hand on this one, especially with Tower's experienced management team and a clear strategy for delivering improved performance.

My previous estimate of Tower's value (pre-Kaikoura earthquake) suggested it was worth around NZ$1.30 per share in the short term, and I note that a takeover bid at NZ$1.26 per share was rejected by Tower in August last year.

At the time, Chairman Michael Stiassny warned shareholders of the possibility of further 'low ball' offers. Admittedly this was in reference to a takeover offer that was lower than the then current share price, but to my mind it has not been adequately explained why a NZ$1.17 offer today is better than a NZ$1.26 offer in August last year – especially since the company's underlying results have improved since then.

Shareholders also miss out on their final dividend due to its suspension – further benefiting the buyer, and Tower was not exactly expensive to begin with.

I'm not convinced today's offer is the best solution for Tower shareholders, and will be voting against it.

The post Takeover: Why Tower Limited (Australia) shares soared 43% today appeared first on The Motley Fool Australia.