Stockland Corporation has announced the acquisition of a 19.9 per cent stake in rival Australian real estate firm Australand Property Group, in a move which some analysts view as paving the way for a full takeover.
Stockland announced that it had bought up nearly a fifth of equity in Australand for a consideration of approximately $435 million, at an average price of around $3.78 per stapled security, a 2.8 per cent discount compared to the closing price of the preceding trading session.
Confirmation of the acquisition by Stockland coincided with an announcement made by Singapore's CapitaLand Ltd that it had sold its remaining 39.1 per cent stake in Australand for around $849 million.
Despite the conclusion of an earlier strategic review that Australand was one of its key investments, CapitaLand reduced its holdings in the company from 59.1 per cent to 39.1 per cent in 2013 at a loss, out of its eagerness to pursue other opportunities in the Singaporean and Chinese markets.
CapitaLand's announcement that it planned to offload its 59 per cent stake in Australand in early 2013 had made the Australian property group a likely acquisition target, with Stockland viewed by many as the leading contender for a full takeover.
A full takeover of Australand by Stockland, which is currently Australia's biggest diversified property trust, would increase its $8.9 million market capitalisation by $2.2 billion, leading to the creation of a new $11 billion giant in the local real estate industry.
"Australand has a diverse and complementary portfolio of assets, including a quality industrial portfolio and medium density residential projects that are well aligned with our strategy," said Stockland CEO and Managing Director Mark Steinert in an official statement. "Over time this holding will enable us to explore strategic opportunities with Australand."
While company spokespeople have remained mum on whether these "strategic opportunities" could include Stockland further increasing its equity stake in Australand, property analysts consider a full takeover to be a highly likely outcome.
Stockland's 19.9 per cent stake in Australand is just shy of the 20 per cent threshold which Australia regulations stipulate as the starting point of a takeover bid.