Clock ticking on Investa deal

Clock ticking on Investa deal

14 September 2018

The $11 billion Investa Property Group has intervened in a court case, staking out its position ahead of a crucial meeting to approve a $3.3bn takeover bid for its prized listed landlord, Investa Office Fund (IOF), by US private equity giant Blackstone, reports The Australian.

The group argued that the independent board of the listed IOF should consider a rival bid by Canada’s Oxford Properties Group should it be made in coming days.

Blackstone is locked in a battle with Oxford for control of the listed landlord, which owns stakes in about 20 towers, including Sydney’s Deutsche Bank Place.

The fight for the fund has been billed as contest between the US group, which had made a highly geared $3.3bn bid, and the Canadian group, which is backed by its deep-pocketed Canadian parent OMERS, which owns long-term assets including toll roads around the world, says The Australian.

Australian office towers are attractive to buyers like Blackstone as they can borrow cheaply to soup up their returns from the properties. They can also quickly on-sell unwanted assets to buyers eager to buy into local office markets.

For pension fund-backed groups like Oxford, buying into Australia’s commercial property market has become more important as Sydney and Melbourne are now viewed as vital parts of any global portfolio.

Blackstone argued in court on Monday to get a crucial meeting on its $3.3 billion takeover of the Investa Office Fund on track for next Monday.

Oxford countered that it be given time to work up a superior plan to the Blackstone offer and to start a true auction for the group.

Investa then joined the fray, arguing that IOF allow Oxford time to work up a superior bid, forcing Blackstone to either lift its offer or pull out.

The group’s tactics have put it at odds with the independent board of IOF, which has agreed to new conditions laid out by Blackstone, including a break fee of up to $33m.

Investa, which is owned by the unlisted Investa Commercial Property Fund and investment bank Macquarie, has a key hand in the takeover as the ICPF also owns nearly 20 per cent of IOF.

As it stands, a court-approved shareholder meeting will be held next Monday to vote on the Blackstone offer at $5.52 per share, which tops the Canadian bid at $5.50, says the AFR.

Thus, Blackstone is currently ahead in the race and the clock is ticking.

While the Investa Office Fund board has endorsed the latest, sweetened Blackstone bid, along with a hefty $33 million break fee, it can still engage with a better offer from Brundage and the Oxford team.

But it would need to be a knockout shot.