Fidelity Life Assurance says its biggest shareholders, with 70 per cent of the company, plan to reject rival Tower's unsolicited $118 million cash and scrip takeover offer.
Fidelity has retained an independent adviser to help evaluate the offer, a requirement of the Takeovers Code, though already it is signalling unease with the proposal Tower last week offered $82 a share for Fidelity, made up of $55 cash and $27 of Tower shares.
It said the terms were based on the "limited publicly available information in respect of Fidelity" and it would be seeking further data.
The bid is "unhelpful and, in our view, inappropriate," Fidelity chairman Ian Braddock said in a statement.
He has declined to answer questions from the media.
Fidelity is also uncomfortable at the prospect of providing information to a rival, saying it wouldn't be in the best interests of shareholders.
The firm says its business model, which includes independent advisers, is a "critical component of our success."
"We are pleased to note that the two major shareholders in the business, who together own 70 per cent of the company, have advised Fidelity that they would not be accepting the intended offer," Braddock said.
Jeffrey Meltzer and Michael Whale are listed as the biggest shareholder of Fidelity, with 53 per cent, and Gregory and Mary Burgess are second biggest, with about 17 per cent.
Shareholders were advised to take no action pending a formal assessment of the offer.
Shares of Tower were unchanged at $1.86.