Frasers Centrepoint Ltd. (FCL) will pursue its offer to buy Australand Property Group (ALZ) for about A$2.6 billion ($2.4 billion) in the Singapore real estate company’s biggest proposed acquisition after trumping a bid by Stockland.
Frasers completed due diligence and will proceed with an off-market takeover offer to acquire all Australand shares, following a preliminary bid last month of A$4.48 per share, the two companies said in a regulatory filing today. That compares with Stockland’s all-share bid, valued at A$4.43 as of June 3.
The acquisition would give Frasers control of Australand’s A$2.3 billion of office and industrial properties and A$9.3 billion of developments in Australia, where the Singapore company is already building the 2,000-apartment Central Park project in downtown Sydney. Frasers is seeking to boost its operations in faster-growing markets abroad and has flagged Australia and China as preferred destinations.
“The due diligence affirms the rationale and strategic fit for FCL to acquire Australand,” Frasers Group Chief Executive Officer Lim Ee Seng said in the statement. “FCL had planned on achieving several key strategic objectives over the medium term, including increasing the proportion of overseas earnings and recurring income as well as enhancing our platform in Australia.”
Australand had granted Frasers four weeks of exclusivity to conduct due diligence. Under the Frasers offer, Australand shareholders would retain their expected first-half dividend of 12.75 Australian cents per share, according to the filing.
The offer is subject to conditions including acceptance by more than 50 percent of Australia’s shareholders and approval from Australia’s Foreign Investment Review Board, according to the statement. The offer is scheduled to open on July 7 and close on Aug. 7 unless extended, it said.
Australand said in May it expects its 2014 operating earnings per share to rise as much as 25 percent, compared with its earlier forecast for an increase of as much as 20 percent. The group projects earnings will rise as much as 15 percent a year until the end of 2015, it said.
Overseas business contributed to 38 percent of Frasers’s earnings before interest and tax in the year ended March 31, compared with 10 percent a year earlier, the company said in May.
Australand shares, which have risen 15 percent this year, were unchanged at A$4.44 at the close of trading in Sydney. Frasers added 0.3 percent to S$1.86 before it was halted from trading on the Singapore exchange.
Stockland (SGP) bought 19.9 percent of the Sydney-based company and followed that with an all-share bid equivalent to A$4.20 a share, which Australand rejected on April 23. It returned with a sweetened bid that equated to A$4.35 a share on May 28 and A$4.43 on June 3, the day before Frasers made its bid.
To contact the editors responsible for this story: Andreea Papuc at firstname.lastname@example.org Tomoko Yamazaki, Ben Scent