The Tower Limited (Australia) (ASX: TWR) share price plunged 26% in early trading today, after the New Zealand Commerce Commission (NZCC) declined the application by Suncorp to acquire the company.
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.
