Tower slides as takeover talk wanes

By RICHARD BRADDELL

WELLINGTON - Tower's shares continued their slide yesterday as the company's intention to pursue strategic alliances dampened speculation that its takeover was imminent.

The stock closed at $5.02, down 8c and 85c off its $5.87 peak two weeks ago when it was riding high on speculation it had hired Deutsche Bank to advise on a possible takeover.

But near-term takeover prospects looked slim last week when chief executive James Boonzaier said the company was more likely to make acquisitions in its own right or look to shareholding alliances for its subsidiaries.

In a note yesterday, broker Ord Minnett rated Tower an accumulate at current levels, but advised investors not to overplay its acquisition appeal.

Ord Minnett said Tower's $38.6 million interim profit reported last week was below its forecast of $44.8 million, but, while disappointing, should be seen in the context of experience losses of $3.9 million that should drop out of future results.

"Tower has indicated that it is very close to settling a number of strategic alliances aimed at gaining scale, improving distribution, gaining access to technology and risk sharing," Ord Minnett said.

"Given that Tower is very active in seeking strategic alliances, it is very likely that most of the takeover rumours surrounding the stock have been sourced from these alliance discussions."