This article is from the Australian Property Journal archive
GLOBAL private-equity firm Proprium Capital Partners and AVID Property Group have launched a $374 million takeover bid for ASX-listed AVJennings, in a case of déjà vu for one of Australia’s oldest homebuilders.
The takeover offer came as AVJennings shareholders voted against the company’s remuneration report, following a soft full-year result that saw almost all of its profit wiped out by the write-off of a Queensland project.
AVID has made a bid of $0.671 per share and the AVJennings directors have entered into an exclusivity deed to finalise the indicative proposal.
The offer represents a 103.0% premium to the closing price of AVJennings shares at 27 November 2024 of $0.33; and 102.0% premium to the 1-month VWAP of AVJennings shares to 27 November 2024 of $0.3317; and 108.0% premium to the 3-month VWAP of AVJ shares to 27 November 2024 of $0.3221.
AVID also proposes to permit AVJennings to pay a fully franked special dividend on or before the scheme implementation date, allowing eligible AVJ shareholders to receive additional value of up to approximately $0.06 per share in franking credits.
AVJennings’ major shareholder and non-executive chairman, Singaporean businessmen Simon Cheong backed the proposal at the yesterday’s Annual General Meeting.
Cheong, who is a board member of Singapore Airlines, through his company SC Global is the largest shareholder and currently controls about a 54% stake in AVJennings.
“Your directors are of the unanimous view that the proposal would provide shareholders the opportunity to realise their investment at a price significantly above historical trading levels.
“Your board has been engaged with AVID since July 2024 and conducted extensive negotiations and discussions which have led to the proposal. Directors intend to recommend the proposal, subject to no superior proposal emerging,” he said.
The proposed takeover of AVJennings is part of AVID’s continued expansion in the residential property sector following the launch a new land lease communities business.
AVID is backed by private equity firm Proprium Capital Partners and its current portfolio includes more than 6,300 residential blocks and a gross revenue pipeline of $5 billion.
The takeover will boost AVID’s portfolio, adding 9,871 lots under control and 1,062 lots under development, with projects across NSW, Victoria, Queensland and South Australia.
However, it is unclear whether AVID will continue to operate the AVJennings brand, which is one of Australia’s oldest, dating back to 1932.
Founded by Sir Albert Jennings, the company was listed on the ASX in 1994.
AVID’s takeover proposal is a case of déjà vu for AVJennings, which has been at the centre of a corporate manoeuvre before.
But this is friendly compared to almost 14 years ago, when Cheong and CEO Louis Milkovits stared down corporate raiders Sir Ron Brierley and Gary Weiss’ attempt to take over the residential builder.
For several years Weiss led unsuccessful challenges seeking to wind up AVJennings and sell its assets, but in March 2011 threw in the towel.
Weiss went on to famously dethrone Cromwell Property Group founder Paul Weightman from the listed property giant.
AVJennings shareholders yesterday voted against the remuneration report with a 52.55% vote against. The subsequent spill motion was not carried, with just over 60% voting against. The re-election of directors Jerome Rowley and Bruce Hayman were carried, with some opposition, while the election of non-board endorsed directors Brad Newcombe and Rachel Elizabeth Brown were soundly defeated.
Meanwhile the takeover of AVJennings comes at a time of major shifts in Australia’s homebuilding industry following the collapse of Porter Davis.
Japan’s Sumitomo Forestry Group, which already owns Henley Homes, acquired a major stake in Metricon in September, giving it control in the number one and two largest homebuilders in Australia, whilst Sekisui House Australia on sold a 2,000-unit project at Melrose Park to another Japanese firm, Hankyu Hanshin Properties, after Sekisui bought out Payce’s stake in the development.
There is market speculation that Simonds Group is also on the radar of Sumitomo Forestry Group.
