This article is from the Australian Property Journal archive
SHARES in FKP Property Group lifted out of the doldrums last week after getting a much needed boost from Lend Lease's failed $1.3 billion takeover bid.
Last Friday, FKP’s share price opened at $4.70 after entering a trading halt at $3.75 and was trading as high as $5.20 before closing 31.6% or $1.20 higher at $5.00.
More than 24 million volumes of shares traded valued at over $5 million, which help push FKP’s market capitalisation from $995.20 million to $1.33 billion.
The frenzy at FKP was driven by a takeover approach made by Lend Lease.
Lend Lease proposed to acquire all units in FKP for $5.00 per security in a scrip and cash deal. The price proposed plus retention of the final FKP distribution of 15.7 cents would have represented a substantial 65% premium to the three month volume weighted average FKP security price on the day prior to Lend Lease’s initial approach to FKP.
But FKP rejected Lend Lease’s bid, chairman Ben Macdonald labelled the approached by Lend Lease as unsolicited, highly conditional, and incomplete.
Macdonald said the proposal substantially undervalues FKP and is not one that the board can recommend to shareholders.
“The Lend Lease proposal is opportunistic and does not reflect FKP’s underlying value and future prospects. FKP is in a strong financial position and is set to deliver strong earnings growth from FY09 onwards.
“FKP is the market leader in the Australian retirement sector, and is also positioned to benefit from significant growth in its development, land and funds management divisions,” he concluded.
In response to FKP’s rejection, Lend Lease said it was disappointed with FKP’s board decision.
Lend Lease could have easily fund the takeover, the group has one of the lowest gearing in the listed property arena at 15.1%. A Lend Lease and FKP merger would have created a $5.5 billion company.
“Lend Lease believes the combination of the two companies would have provided an exciting opportunity to create a leading ASX listed, globally diversified property group with significant benefits for shareholders of Lend Lease and FKP.
“With Lend Lease’s strong balance sheet and low gearing, the combined group would have enhanced capacity to fund FKP’s development pipeline and to fund future growth,” Lend Lease said in a statement.
Lend Lease said it remains open to continuing discussions with FKP.
But the failed bid did not reflect positively on Lend Lease, its share’s closed 31 cents or 3.1% lower at $9.79.
Lend Lease also announced last Friday that it was experiencing delay in securing project debt for the 2012 Athletes’ Village project in Stratford, United Kingdom.
Lend Lease said it is working closely with the Olympic Delivery Authority to finalise contractual arrangements for the project. Both Lend Lease and the ODA remain confident that these will be finalised in the short term.
“Given current market conditions, it has taken longer than envisaged to secure project debt. Any debt funding will be project specific and is expected to be in place by the end of the year.
“Lend Lease’s equity contribution is subject to this funding being in place. Meanwhile Lend Lease has commenced work on site, including infrastructure works and piling on the first housing blocks, with arrangements in place for cost recovery from the ODA,” the group concluded.
In other FKP related news, FKP has maintained its total distribution/dividend of 31.7 cents per stapled security for the 2008 full-year based on an estimated distribution/dividend for the half-year of 15.7 cents per stapled security.
FKP is continuing to offer a Dividend Reinvestment Plan at a 2.5% discount.
Australian Property Journal
