Stockland Lifts Australand Offer to $2.5b

Wednesday, May 28th, 2014
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Property developer Stockland has increased its takeover offer for rival Australand to $2.5 billion.

Stockland’s new share swap offer values Australand shares at $4.35 each, up from its previous rejected offer of $4.20.

The new offer comes after the two companies held talks following the rejection of the first takeover bid in April.

Stockland acquired a 19.9 per cent stake in Australand in March.

The new offer provides an attractive valuation for Australand and its shareholders, and the two companies together would be a stronger, dominant player in the Australian property market, Stockland chief executive Mark Steinert said.

Australand is yet to respond to the increased offer.

Stockland says $2.5b Australand bid final

By Greg Roberts

Stockland says its sweetened $2.5 billion takeover bid for fellow property developer Australand is final and as good as it will get.

Australand’s board did not rule out accepting the offer as it did the initial $2.4 billion bid, saying it would consider it, raising speculation a deal would be made.

Stockland chief executive Mark Steinert said senior management from both companies had been holding talks since the process began.

It was also reported that Stockland had offered one-on-meetings to institutional investors with its management team on Wednesday to discuss the offer.

Some Australand investors are against the deal, with the company’s shares falling on Wednesday.

Stockland’s new share swap offer values Australand shares at $4.35 each, up from its previous rejected offer of $4.20.

Stockland has also offered to add a $250 million cash component to what is currently a non cash deal, but that would reduce the current scrip ratio of 1.124 shares for each Australand share.

Mr Steinert insisted he had uniform support from shareholders of both companies that he had spoken to so far.

“That has been a key part of giving us the confidence to make this compelling final proposal today,” he told an analysts briefing.

“The combination creates a really great real estate company.”

Stockland acquired a 19.9 per cent stake in Australand in March.

The following month it made its initial takeover bid.

If the pair merge, the combined group would be Australia’s leading residential developer.

It would also hold the number one spot in regional shopping centre developments and number two position in distribution warehousing, logistics and business parks.

Stockland said a deal would immediately be earnings accretive, increasing earnings per share by five per cent and delivering savings through synergies of $15 million in the first year and $25 million in the second.

However when analysts questioned where those figures had come from, Mr Steinert said while he was confident in the savings figures due diligence still had to be done on Australand’s books to prove it.

CMC Markets chief market strategist said he thought a deal would go ahead and that Stockland’s bid was final, given there were legal implications for reversing such statements.

“I think there is unlikely to be another bid, it represents a better than 20 per cent premium to Australand’s net tangible assets and I would think it is enough to get it over the line,” he said.

He cited Australand’s share price fall to investors not liking a non-cash scrip bid that forces them to be exposed to Stockland’s different profile.

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