The Commerce Commission has received an application for insurance company Vero to purchase all shares in troubled rival Tower.
Vero took a surprise share in Tower last month and currently holds more than 13 percent.
It wants to take a full stake and has applied to the Commerce Commission for clearance.
The competition watchdog said it would consider whether the proposed merger would result in less competition.
It's not the only company interested in Tower. Toronto-based Fairfax Financial Holdings has offered to buy the company for $197m to get a foothold in the New Zealand market.
Two of Tower's larger shareholders, including fund manager Salt Funds and the Accident Compensation Corporation, which hold 18 percent between them, have said they would accept that offer.