Tower has launched a $118 million takeover offer for Fidelity Life Assurance.
It is offering $82 per share, comprising $55 cash and $27 worth of Tower shares.
Tower is 35% owned by Guinness Peat Group.
It says a merger would reinforce both companies' ability to compete in an industry where most players are overseas-owned.
Shares in Tower were placed on a trading halt before the announcement on Friday afternoon. They later gained 4 cents to finish the day at $1.87.
Guinness Peat Group was up 1c to 68c.
