Australand Rejects Stockland $2.4 Billion Takeover

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Wednesday, April 23rd, 2014
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Australand’s board says a share-swap takeover proposal presented by Stockland on Tuesday was not in the best interests of shareholders.

Australand said the deal valued its shares at $4.20 a share, which is below the $4.28 closing price on Tuesday.

“The board does not consider that the terms and conditions of the proposal are compelling, nor does it provide sufficient consideration to Australand securityholders in the context of a change of control,” the company said in a statement.

It has rejected a request from Stockland to open its books and enable Stockland to carry out due diligence on a potential merger.

Stockland and Australand own and develop housing estates, industrial properties and office and apartment blocks.

Stockland holds a 19.9 per cent stake in Australand, and has called on the company’s board to engage in merger discussions.

“Stockland and Australand are each strong businesses with complementary portfolios and cultures, and long track records of delivering for customers, employees, securityholders and the community,” Stockland chairman Graham Bradley said.

“We believe that the Australand board owes it to its stakeholders to engage with us and facilitate our request for due diligence, to see if a mutually beneficial merger of our two groups can be achieve.”

UPDATE: Property developers in takeover stoush

April 23  – Property developer Stockland will wait to hear what investors have to say about the rejection of its $2.4 billion takeover proposal for Australand before considering further options.

Australand’s board has determined a share-swap takeover proposal presented by Stockland was not in the best interests of Australand securityholders.

Australand also rejected a request from Stockland to open its books and enable Stockland to carry out due diligence on a potential merger.

Stockland chief executive Mark Steinert has urged the Australand board to engage with his company, which holds a 19.9 per cent stake in Australand.

Ultimately, it was up to investors to determine if they saw strategic merit in a merger of Australand and Stockland, or if they are comfortable with the two companies remaining separate, Mr Steinert said.

A significant number of investors hold stakes in both companies, he said.

“We’ll listen carefully to investors over the next few days and take on board their thoughts and views in determining what the next steps are,” Mr Steinert said.

If Australand expected too high a price from Stockland, or continually blocked advances without engaging it, there was a point where Stockland would just sell its existing Australand stake and “move on with life”, he said.

Stockland proposed to offer 1.111 of its securities for each Australand security.

Australand said the proposal valued its securities at $4.20 each, which was below the $4.28 closing price on Tuesday.

“The board does not consider that the terms and conditions of the proposal are compelling, nor does it provide sufficient consideration to Australand securityholders in the context of a change of control,” Australand said.

Stockland said the current trading price of Australand securities already reflected a significant takeover premium, after Stockland bought its major stake in March.

Stockland and Australand own and develop housing estates, industrial properties and office and apartment blocks.

Mr Steinert said a merger with Australand would be consistent with Stockland’s strategy of adding medium density residential projects, logistics and business parks to its portfolio.

By Trevor Chappell
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