Tower denies bid talk rumour

WELLINGTON - Tower's head shares closed yesterday at their highest level since mid-January, up 6c at 511c, but below their mid-session highs after the financial services group denied rumours it was in bid talks.

Brokers later attributed the strength of the stock to the fact that Tower is to replace Brierley Investments in the top 10 share barometer, the NZSE-10 Index.

Earlier, an unnamed "highly placed" industry source was reported as saying the insurer was in early talks, but Tower chief executive James Boonzaier denied this, saying, "I can say that rumours about talks are unfounded."

Financial services shares have been firmer since Commonwealth Bank of Australia revealed a bid for Colonial two weeks ago.

National Australia Bank has been widely expected to make a play for AMP to keep up with a merged CBA-Colonial. But last week an Australian analyst said Tower was too small to be a target for the major banks.

Mr Boonzaier said the whole market knew that Tower shares were undervalued.

"Here in New Zealand, for example, we still are, by a fairly big margin, the largest retail fund manager in the country and had the second biggest inflows last year."

He said Tower was gaining market shares across the board, in fire and general insurance, retail funds management and life insurance.

"We have told the market we expect to make expense savings of around $A9 million ($11.4 million) in the current year."

"Yes, we believe that Tower needs to grow.

"Our average growth in the last 10 years in assets has been 25 per cent a year ... from $2 billion to $15 billion ... That's a very fast growth rate."

Tower shares started the year at 551c.

- NZPA