This article is from the Australian Property Journal archive
CROMWELL has sweetened its takeover bid for Investa Office Fund to almost $3 billion – $500 million more than Dexus’ original offer.
The new $2.978 billion bid is significantly higher than Cromwell’s first offer of $2.73 billion made in November last year, which IOF knocked back citing a lack of enough evidence from Cromwell of how it would raise the equity to fund the proposal.
Since the original bid was made in November, both property giants have engaged in a public stoush because IOF has refused to grant Cromwell due diligence.
Cromwell argued that IOF should give it the same rights granted to Dexus.
In April last year, Cromwell along with Investa Office Management (IOM) and Morgan Stanley voted against Dexus’ $2.5 billion bid for IOF, defeating Dexus’ takeover proposal after a bruising battle.
But the battles were not just fought externally, it was tumultuous period within the Investa family, with infighting erupting between the different managements.
The IOF independent board committee (IBC) rejected IOM’s rival proposal due to concerns about IOM’s failure to disclose conflict of interests that exist between the IOM platform and Investa Commercial Property Fund (ICPF), and the lack of alignment with IOF unitholders.
This came after Morgan Stanley blocked IOF from participating in the bidding process for the IOM platform, despite pleadings from IOF’s IBC.
IOF’s public outcry fell on deaf ears with Morgan Stanley informing IOF’s IBC that it would not entertain an offer from IOF to acquire IOM.
Instead, Morgan Stanley sold the IOM platform to Investa Wholesale Funds Management.
Morgan Stanley subsequently sold its 8.94% stake in IOF to the ICPF, but not before the investment giant used its voting power to reject Dexus’ bid.
Dexus tried unsuccessfully in court to stop IOM and Morgan Stanley from voting and called on both parties to cease advocating opposition to its $2.5 billion proposal.
After Dexus was defeated, Cromwell emerged as the new contender vying for IOF.
Cromwell has not had a smooth ride either, with IOF publicly questioning whether Cromwell can fund the takeover and refusing to grant full due diligence.
Yesterday Cromwell made a cash offer of $4.85 per unit for all of the outstanding units in IOF, this is up from the original offer of $4.45 per unit.
The offer is inclusive of, on Cromwell’s assumption, an anticipated distribution of $0.10 per IOF unit for the half year period ending 30 June 2017.
The proposal is subject to a number of conditions including undertaking due diligence.
IOF said in a statement that the independent directors have not yet formed a view on the merits of the proposal.
“The independent directors propose to engage with Cromwell in relation to the proposal including its terms and conditions and the disclosure of the identity of the proposed equity investors to the independent directors.
“The independent directors will continue to negotiate the terms of the acquisition of 50% of Investa Office Management (Platform) with Investa Commercial Property Fund in order to establish options for IOF unitholders,” IOF said.
Australian Property Journal
