This article is from the Australian Property Journal archive
THE independent directors of Westpac Funds Management Limited have voted in favour of Mirvac’s $1.2 billion takeover bid of the Westpac Office Trust.
The independent directors have recommended WOT investors to accept the bid subject to the findings of the independent expert’s report and in the absence of a superior proposal.
Under the terms, unitholders will have a choice of either:
– 0.597 Mirvac stapled securities for every one WOT unit held or 0.597 Mirvac IRs for every one WOT IR held, valued at $0.86 per WOT unit; or
– Cash of $0.86 per WOT unit up to a maximum of $200 million in aggregate under the offer.
Based on Mirvac’s stapled securities price $1.44 on April 27 2010 the an implied value of $0.86 per WOT unit represents a premium of 12.4% to the closing price of WOT units of $0.77 on April 06 2010 and 2.4% to WOT’s NTA of $0.843.
As part of the scheme, Westpac will receive $15 million to forgo future management fees, transaction and advisory fees.
Mirvac will fund the entire transaction from a combination of existing cash reserves, undrawn debt facilities and the issue of new Mirvac stapled securities.
Mirvac’s managing director Nicholas Collishaw said the acquisition will add $1.1 billion of quality CBD and suburban offices to its portfolio, to $5.7 billion. It will also increase the weighted average lease expiry of Mirvac’s investment property portfolio from 5.8 years to 6.2 years.
“The combination of WOT and Mirvac’s portfolios will create a stronger and more diversified property investment portfolio, benefiting both existing and new Mirvac securityholders,” he added.
The proposed transaction is expected to deliver 3.0 per cent earnings accretion to Mirvac starting from FY12.
WFML independent director and chairman Alan Cameron said having considered a number of alternatives, they believe Mirvac’s offer is attractive and represents a premium to both recent trading prices and NTA.
They were advised by Citi and Allens Arthur Robinson and Mirvac was advised by Merrill Lynch.
Standard & Poor’s Ratings Services said its ‘BBB/A-2’ ratings and positive outlook on Mirvac Group are not immediately affected by the transaction.
S&P said the acquisition is consistent with Mirvac’s strategy to reweight its earnings toward property investment and to improve the quality of its investment portfolio.
“Furthermore, we anticipate that Mirvac will continue to improve the quality of its investment portfolio over time via the divestment of lower quality assets,”
S&P said although some uncertainties remain regarding the proposed acquisition’s final funding structure, given the cash-out facility and retail share-purchase plan, it considers that the group retains sufficient capacity to manage its capital base.
S&P said an upgrade of the long-term rating remains possible in the next 12-to-18 months if Mirvac can progress the divestment or rationalisation of its non-core activities and assets, integrate recent and proposed acquisitions, continue to strengthen key credit measures, maintain a robust liquidity profile, and successfully navigate the challenging operating environment.
Australian Property Journal
