Takeover offer at A85c
Trans Tasman Properties Ltd issued an offer on Friday for the 49.8% of Australian Growth Properties Ltd it doesn’t already own.
The offer at A85c/share values the minorities at $A128 million, the whole company at $A256 million. Trans Tasman proposes paying from its own resources and a new $A105 million HSBC facility.
The bid, through subsidiary Trans Tasman Properties (AGP) Pty Ltd, has a closing date of 14 November.
It’s been lodged before AGP’s board completes a strategic review of the options for the Australian company, which also has to be considered by Trans Tasman but has no delivery date. AGP has sold 75% of its assets, including 363 & 345 George St, Sydney, sold to German funds manager Deka for $A397 million. AGP’s remaining portfolio has a book value of $A65 million.
At high end of market range, 17% discount to nta
The offer was made at the closing share price on 21 August, A85c, which was towards the high end of the price range of the past 12 months, A66-90c.
The offer is subject to a number of conditions, including 1 for 75% acceptance. Trans Tasman said if it gets 75-90% of AGP it would maintain the Australian company’s listing. Beyond 90% it would move to compulsory acquisition.
At the half year, AGP’s net tangible asset backing was $A1.02/share, up from A99c a year earlier. The market & bid price is a 16.7% discount to nta.
SEA Holdings Ltd, of Hong Kong, headed by Jesse Lu, owns 55.16% of Trans Tasman and also owns the AGP management contract. Trans Tasman is run inhouse.
Floated in 1997
Trans Tasman floated AGP in 1997, and tried but failed to float a trust in New Zealand containing its main assets on this side of the Tasman. It has since sold the bulk of its unwanted New Zealand assets and is getting on with a change in its roll, introducing some commercial development and carrying out an industrial land subdivision near Auckland International Airport, to be followed by a 2nd subdivision on neighbouring land.
Trans Tasman said it supported the sale of properties to Deka, “as it believes that the Australian commercial
property market is currently near the top of the valuation cycle. Trans Tasman considers that a softening of the property market is likely to lead to stagnant or lower market prices.”
Trans Tasman said it appreciated not all AGP shareholders might take the same view of AGP’s activities as Trans Tasman (which include not liquidating AGP), and some might wish to exit their investment in AGP even before the results of the strategic review are available. “The cash offer provides the opportunity of an alternative for those shareholders in AGP who wish to sell their shares, in addition to selling through the stock market where the depth of the market will vary.”
The offer rates as a major transaction under NZX listing rules, so Trans Tasman has to call a shareholder meeting. The date hasn’t been given.