Hotel Property Investments rejects takeover bid by Charter Hall, Hostplus
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The news: ASX-listed REIT Hotel Property Investments (HPI) will tell its shareholders to reject a joint off-market takeover offer by Charter Hall Retail REIT and Hostplus, calling the move "opportunistic, not compelling and materially undervalues HPI".
The numbers: Charter Hall Retail and Hostplus have offered to buy all of the shares it doesn't currently own in HPI for $3.65 per share, subject to a 50.1% minimum acceptance condition, and other limited conditions.
Charter Hall Retail and superannuation fund Hostplus would each contribute 50% of the cash consideration for the acquisition, and indirectly own 50% of the acquired business.
In March, Charter Hall Retail and its parent Charter Hall Group equally funded a joint venture trust which acquired a 14.8% strategic stake in HPI, becoming the company's largest shareholder.
The offer with Hostplus represents an 11.6% premium to the $3.27 closing price of HPI shares on 27 March, which was the trading day prior to the announcement of Charter Hall Retail and Charter Hall Group's 14.8% stake acquisition in HPI.
HPI shares were up 5.46% to $3.67 in early trading, having gained more than 20% since the turn of the year.
However, HPI noted that the takeover off represents a "minimal 4.9% premium" to its last closing price and a "significant discount" of around 10% to net tangible assets as at 30 June.
Charter Hall Retail REIT shares were down 1.91% to $3.60 in early trading.
The context: HPI said its board has considered the offer "having been verbally briefed on its terms over the weekend".
However, the board will recommend that shareholders reject the offer, with HPI believing that its existing portfolio and current strategy offer "significantly greater value to HPI security holders".
Charter Hall Retail said the offer will deliver "significant benefits" to HPI shareholders, including "certainty of all-cash consideration, which is fully funded, delivering immediate value at an attractive price at a time of listed market volatility".
The company also noted that the offer is an "attractive premium" to HPI's historical trading levels, that it will give the company access to liquidity without the need to pay brokerage fees, and that the transaction carries a low execution risk with an offer from an Australia domiciled bidder.
HPI owns a portfolio of 58 Australian convenience hotel properties, predominantly located on the eastern seaboard and leased to the Queensland Venue Company and Australian Venue Company.
What they said: "The proposed acquisition of HPI alongside Hostplus is attractive and designed to deliver significant benefits to both HPI security holders and [Charter Hall Retail] unitholders," said Bill Ellis, fund manager of Charter Hall Retail and Charter Hall's retail CEO.
"The acquisition is in line with [Charter Hall Retail]'s strategy to invest in high quality, net lease retail assets, while partnering with leading convenience retailers to deliver resilient and growing income streams", he said.
The sources: ASX announcement, ASX announcement
