Irongate Group rejects the latest buyout offer from 360 Capital Group
Share this article:
IRONGATE Group, formerly Investec Australia Property Fund (IAP), has spurned a revised offer from Australia-based asset management firm 360 Capital Group.
Irongate had wind of IAP’s intentions in July already, when it warned in a letter to shareholders against appointing two 360 Capital’s directors to the IAP board at the annual meeting that month, and stating in the letter: “The board is concerned … 360 Capital Group could seek to gain effective control of IAP below its fundamental value.”
Shareholders heeded the call evidently, as the two directors did not receive enough votes for their appointment at the IAP annual meeting. 360 Capital Group already holds about 19.11 percent of IAP shares.
IAP said on Friday that it had received a revised proposal from 360 Capital Group to acquire, by way of a trust scheme, all of the remaining shares in IAP, which it did not already own, for A$1.65471 (R18.57) cash per security, which represented a headline price of A$1.70 less than the announced distribution of A$0.0453 per security for the half-year ended September 31, 2021.
But IAP’s board said the revised offer reflects an increase of only 3.1 percent from the original offer of October 15, 2021, “with no changes to its highly conditional terms.”
“The IAP board has consulted with its advisers and has unanimously concluded the revised proposal continues to materially undervalue IAP and therefore does not represent a compelling proposition for security holders,” IAP said.
Its board said it was committed to maximising security holder value and would appropriately consider a proposal that was consistent with this objective.
360 Capital said in response to the latest rejection: “360 Capital is disappointed the IAP board has again chosen not to engage with 360 Capital despite the proposed indicative proposal representing an attraction premium across a number of metrics.”
360 Capital said furthermore, it was surprised IAP had not given its security holders the opportunity to be aware of and consider the improved offer prior to releasing its rejection announcement.
Its managing director Tony Pitt said in a statement: “360 Capital remains committed to working with the board and management of Irongate Group for a period of time, but will remain disciplined in its investment approach to its assets, particularly given current uncertainties in this rising interest rate environment.”
IAP’s share price was up 1.87 percent to A$1.63 on the Australian Stock Exchange on Friday, which means the 360 Capital offer represented a 4.2 premium on the market price on that date.
In the six months to September 30, 2021, IAP reported net asset value per unit at A$1.51, which had increased from A$1.48 at the same time in 2021.
The 360 Capital offer represented more than 12 percent premium based on the latest net asset value.
In the interim period to September 30, IAP increased its income attributable to unitholders considerably to A$108.89 million from A$38.34m.
BUSINESS REPORT ONLINE