Silence greets Tower rumour

WELLINGTON - Financial services group Tower was giving little away about takeover talk as its share price soared to record heights yesterday.

Tower chairman Colin Beyer said, "There's certainly nothing that I can say right now," when asked for comments on the speculation that either a takeover by an Australian financial institution or at least a strategic alliance involving an equity stake was pending.

Contenders to take out Tower are considered to include ANZ Banking Group and Westpac Banking Corporation.

ANZ managing director Murray Horn would not comment on that, or whether the cancellation of its New Zealand class share issue was related to a possible takeover of Tower.

Tower shares traded as high as $5.90 on volume of 314,903, before settling back and closing the day at $5.65, up seven cents on Friday's close.

It is the first time the share has bolted well over the $5.65 issue price since listing on September 28 last year.

Asked if he could say categorically that there was no strategic alliance being discussed or a takeover being discussed, Mr Beyer said: "I can neither talk to you categorically or uncategorically about that.

"But if there is at any stage any significant matter relating to the value of our shares which our shareholders should know about, they will be early on in the know, and so will you."

He was pleased to see Tower's share appreciating.

"I guess one thing that is clear is that there has been a severe misunderstanding of the value of Tower and I'm not sorry about the speculation that is taking place from that point of view.

"I think people are starting to realise that Tower, for its own intrinsic worth, has been sorely misunderstood by the market."

Market analysts say any takeover offer would have to be generous to secure the support of the Tower board and a recommendation to shareholders to waive a 10 per cent cap on any shareholding.

Expectation of takeovers in the insurance and funds management sector has been heightened by the Commonwealth Bank of Australia's takeover bid for Colonial in February.

At $5.65 a share, Tower is worth about $936 million. It is a small player compared to the likes of AMP, whose market capitalisation is around $20 billion.

Most of its shareholders were issued "free" shares in the company when it converted from a mutual society to a public listed company in late September.

ABN Amro broker Nigel Scott said there was a mix of buyers of Tower shares yesterday - the "Percy Punter" betting on the takeover speculation, and some institutions increasing their exposure to the sector. The sellers were small shareholders deciding to exit at the best prices Tower had seen.

- NZPA