This article is from the Australian Property Journal archive
AUSTRALIA’S listed property trust sector is set for a new major player after Centuria and Primewest agreed to a $600 million deal that will create a $15.5 billion platform.
The board of Perth-based Primewest has unanimously recommended the merger in the absence of a superior proposal, following Centuria making an off-market takeover offer and entering into a bid implementation deed.
The result will be a group with a market capitalisation of circa $2.2 billion and assets under management of $15.5 billion, some 52% higher than what Centuria currently boasts.
Centuria joint executive officer, John McBain said the merger represents an opportunity to combine “two highly complementary real estate platforms that share similar philosophies and strong track records”.
“Primewest has a strong distribution platform and expertise across a range of sectors and geographies which are complementary to Centuria.
“We believe the merged group will be strategically poised for further growth in the healthcare and agricultural sectors in particular, as well as the traditional real estate sectors.”
Centuria Healthcare has just partnered with Medibank for a new $64 million private hospital development in Melbourne, and expanded its unlisted healthcare fund.
Meanwhile, Primewest has spent about $40 million adding vineyard and orchard assets in Victoria and South Australia’ to its agricultural fund for which is has been eyeing off an ASX listing. It last year acquired Vitalharvest’s external manager with a view to a float for the trust, but that is now the subject of a bidding war between Macquarie and Roc Partners.
As part of the merger, shareholders of Primewest would receive consideration of $1.51 per security, composed of 20¢ in cash and 0.473 Centuria securities per Primewest security. An independent expert will conclude whether the merger is fair and reasonable to Primewest’s investors before it can go through.
The Primewest board – whose directors represent 53% of its securities – confirmed they intend to accept into the merger in the absence of a superior proposal.
Primewest, co-founded by Alan Bond’s son John Bond, had listed on the ASX late in 2019. It has $5.0 billion in assets across a range of listed, unlisted and private funds
John Bond and co-founders David Schwartz and Jim Litis will enter into two-year employment contracts as senior executives of Centuria, and two-year escrow arrangements in relation to their Centuria holdings upon merger completion.
The deal is expected to deliver earnings per security accretion of 4% for Centuria and 19% for Primewest on a pro forma FY21 basis.
Centuria chairman Garry Charny said the move is consistent with Centuria’s “dual strategy of asset acquisitions and corporate M&A, where this is sympathetic to Centuria’s business model”.
“Primewest is a high quality, well established fund manager and the Centuria board looks forward to the successful completion of the Merger and building on Centuria’s position as a leading Australasian property fund manager.”
