Suncorp subsidiary Vero Insurance has abandoned its efforts to acquire Tower Limited, halting its High Court appeal against the New Zealand Commerce Commission's decision to veto the move.
In a statement to the ASX this morning, Vero announced it received notice of termination from Tower of the Scheme Implementation Agreement it entered into in June.
"As a result, Suncorp will no longer be proceeding with its appeal of the New Zealnd Commerce Commission's decision to decline its application to acquire Tower," the statement read.
"Suncorp is now focused on maximising the value of its Tower shareholding."
In June, Tower announced its intention to enter into an agreement with Suncorp Group, via its wholly-owned subsidiary Vero Insurance New Zealand, which would see Suncorp acquire 100% of Tower's shares at NZ$1.40 per share.
The New Zealand regulator rejected Vero's application to acquire Tower in July, saying it posed a real risk that consumers would end up paying higher prices for insurance cover.
The merger would have removed Tower as the only independent competitor to Vero and IAG with the scale, brand strength and experience to compete effectively across the breadth of personal insurance markets, NZCC chairman Mark Berry said.
"While there are other smaller competitors in personal insurance, we do not consider that they replicate the level of constraint that Tower imposes. Without the competition that Tower provides, there is a real risk that consumers would end up paying higher prices for insurance cover while receiving lower quality, such as reduced insurance coverage," he said.
In September, Vero formally lodged an appeal with the High Court of New Zealand which was quickly followed by Tower launching a cross appeal.
Tower said its board of directors is continuing to develop plans to raise further capital and will update the market with its full year results on 14 November.