Avid Property Group acquires Villa World for $293m

Avid Property Group acquires Villa World for $293m

18 October 2019

Avid Property Group is set to acquire ASX-listed residential developer Villa World Limited for $293 million following receipt of approval from the Supreme Court of New South Wales earlier this week.

Villa World shareholders voted overwhelmingly in favour of the Scheme of Arrangement on Friday, 11 October 2019, securing a 97.96 per cent majority (by votes cast).

The move will see AVID increase its portfolio from 10 to 37 projects and more than 12,000 residential lots, securing a gross revenue pipeline of $4.7 billion.

Avid CEO Cameron Holt said the acquisition – a strategic move combining two strong performing and complementary businesses – would make Avid a significant Australian property player and add to its already diverse mix of developments.

“The acquisition is a significant step for both companies and we’re excited about merging the two businesses and combining our expertise to continue building communities that leave a positive legacy,” Mr Holt said.

“The success of this acquisition means we will strengthen our presence in South East Queensland, in particular, with an additional 16 projects – further positioning Avid as a key national residential property industry contributor.”

The combined business will have greater scale and diversity in its product offering, with Villa World’s portfolio including medium density living and masterplanned communities.

“The deal provides the opportunity to leverage the combined talent and expertise of both businesses, which will create a stronger foundation to deliver on our growth strategy,” Mr Holt said.

“Our joint focus on results, innovation, being customer focused, creating communities and addressing affordable housing in Australia, positions us firmly as a key national industry contributor.”

Villa World shareholders will be paid a cash consideration of $2.0351 and a special dividend of 31¢, which will be made official on October 18.

Villa World will cease trading on ASX on Wednesday 16 October 2019, with implementation of the Scheme set to occur on Wednesday 30 October 2019.

The takeover is a consequence of the softer housing market, when buyers circle quality businesses, particularly public ones, trading below their actual value.

In comments made to The Australian, Mr Holt said that markets were generally improving, thanks to a relaxation of the APRA lending requirements and an interest-rate cut.

“So, I think the timing to acquire a new business the size of Villa World is quite favourable to us as the market strengthens. Underlying that, we still have ongoing population growth, which is a real fundamental in our business.”

Mr Holt’s optimistic view of the residential market was echoed by Housing Industry Association chief economist, Tim Reardon.

“We’re not quite there yet (at the bottom), but certainly in terms of new home sales, we are seeing it pick up in terms of inquiries from customers following the three interest rate cuts and we’d expect the fiscal stimulus, if it starts to flow later in the year, to pick up a little there as well,” Mr Reardon said.

“That would mean from a construction perspective that we’re looking at the bottom of the cycle. From a starts perspective, we see that occurring sometime early in 2020.”