Blackstone sweetens $3.1b bid for Investa Office

Blackstone sweetens $3.1b bid for Investa Office

31 August 2018

US private equity giant Blackstone finally looks set to take over the ASX-listed Investa Office Fund, with a late-hour $3.26 billion cash sweetener winning over dissident investors, says the AFR.

Blackstone increased its offer from almost $5.15¢ to almost $5.35¢ per security, in what it said was its ”best and final” offer for the Fund.

The sweetener adds almost $120 million to Blackstone’s original $3.14 billion offer.

The increased offer is aimed at appeasing the largest shareholder in IOF, the unlisted Investa Commercial Property Fund (ICPF), which holds 19.9 per cent of IOF, and APN Property with 1.4 per cent, both of whom have been vocal in saying the initial offer price did not reflect IOF’s underlying value, says The Sydney Morning Herald.

In its letter to the Investa board, Blackstone said its sweetened offer is conditional on ICPF publicly agreeing to vote in favour of the takeover at the August 29 meeting.

Large investors APN and Pendal are now supporting the price, which is $5.35 once a distribution is taken into account.

“We see the bid price for Investa Office as full and fair and would welcome the opportunity to accept it in the absence of any higher cash bid,” Pendal Group head of listed property Peter Davidson said.

It has been a drawn-out process for IOF since Morgan Stanley sold its stake in the business in 2016.

Since then Dexus Property made an offer at about $3.90, which did not proceed, Cromwell hinted at an offer at $4.40, but that never materialised and now Blackstone has had to sweeten its bid.

The offer is the latest instalment in a global acquisition drive by the deep-pocketed Blackstone, which bought out warehouse owner Gramercy Property Trust in a $10.1 billion deal and won over LaSalle Hotel Properties with a $6.3 billion offer earlier this year.

It came after the unlisted ICPF stared Blackstone down earlier this week, announcing it would vote against the proposal, an offer which had sparked intense debate in the investment community over its merits.

The sweetened offer is still just short of the listed IOF’s latest net tangible asset backing at $5.47, but those in Blackstone’s camp say the listed fund’s low prospects for income and growth in the near term should also be factored in to the offer’s value.

An independent expert’s report by KPMG assessed Blackstone’s original proposal to be “not fair” but “reasonable” and “in the best interests” of shareholders.

Melbourne-based fund manager APN Property was one of the first of the institutional investors to break ranks, slamming the initial offer as under-valued. APN is also now expected to accept the sweetened offer.