This article is from the Australian Property Journal archive
INVESTA Office Fund has rejected Cromwell’s $2.73 billion takeover bid because it said Cromwell could not provide enough evidence of how it would raise the equity to fund the proposal.
Cromwell made a fully-funded cash bid of $4.45 per unit for IOF on November 14, but the fund’s responsible entity, Investa Listed Funds Management Limited (ILFML), was not keen.
Instead, ILFML announced later that day it had decided to acquire Morgan Stanley’s 8.94% stake in the fund at $4.23 per unit.
Cromwell was initially coy about its intentions after purchasing a 9.83% stake in IOF in April, but was far more forthcoming in a statement to the ASX yesterday.
“Cromwell feels this is a disappointing outcome for IOF unitholders. Cromwell is of the view that its Proposal is compelling in the current market environment,” the group said.
Its purchase of the IOF stake came just before Cromwell shareholders officially voted against Dexus Property’ Group’s $2.5 billion takeover proposal at an extraordinary general meeting.
Cromwell’s fascination with Investa’s portfolio has been a long-running affair, having been a major player in the bidding wars for the Investa Property Trust portfolio and the Investa management platform last year.
The ILFML board said Cromwell did not provide enough evidence of sufficient equity funding.
“Cromwell sought comprehensive detailed due diligence investigations for a 40 day period, including meetings with key executives of Investa Office Management, in order to consider whether it would present a proposal to the Board of ILFML.
“Cromwell’s highly conditional, non-binding and indicative letter stated that the equity required to complete its transaction was proposed to be sourced from unidentified third party investors (with whom they were proposing to share due diligence), and to be underwritten by Cromwell and Redefine Properties Limited of South Africa (Redefine) (an associate of Cromwell, being a 25.5% security holder of Cromwell with two representatives on Cromwell’s board of directors).
“Furthermore, Cromwell’s letter attached a letter from Redefine stating Redefine was prepared to underwrite an equity commitment of circa $1.6 to $1.8 billion, however, the commitment was subject to finalisation of terms, completion of satisfactory due diligence and obtaining final internal and any other approvals necessary.
“The independent directors of ILFML considered the Cromwell correspondence and determined that the price proposed and framework for the request, including the lack of satisfactory evidence of sufficient equity funding, was not compelling or attractive to IOF unitholders,” ILFML said in a statement.
Australian Property Journal
