Australand Shares Rise on A$2.6 Billion Frasers Offer

Australand Property Group shares rose by the most in a month after Frasers Centrepoint Ltd. said it will move ahead with a A$2.6 billion ($2.5 billion) off-market takeover offer for the Australian developer.

Australand shares gained 0.9 percent to A$4.48 at the close of trading Sydney, the biggest advance since June 4. Frasers shares lost 1.1 percent to S$1.84 in Singapore, after falling as much as 1.6 percent to S$1.83. Since proposing to bid for the Sydney-based company last month, Frasers has completed due diligence and will move forward with its A$4.48-a-share offer to acquire all Australand securities, the companies said in regulatory filings yesterday.

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 building the 2,000-apartment Central Park project in downtown Sydney. For shareholders of Australand, it offers a better payout than bids from domestic competitors Stockland and GPT Group received over the past 18 months.

“Some of the other offers were reasonable, but the board of Australand was cognizant of growing demand,” said Tony Sherlock, Sydney-based head of property research at Morningstar Australasia Pty. “They’ve done a very good job extracting maximum value for investors.”

The bid’s success is still dependent on acceptances from more than 50 percent of Australand 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, Frasers said.

Under the proposal, Australand shareholders would retain their expected first-half dividend of 12.75 Australian cents per share, the statement showed.

Australia Expansion

“The due diligence affirms the rationale and strategic fit for Frasers to acquire Australand,” Frasers Chief Executive Officer Lim Ee Seng said in the company’s statement yesterday. “Frasers 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.”

Frasers agreed to buy the five-star Sofitel Sydney Wentworth hotel in the city’s center from LaSalle Investment Management for A$201 million, according to an e-mailed statement from broker Jones Lang LaSalle Inc.’s hotel division in May.

Stockland bought 19.9 percent of the Australand and followed that with an all-share proposal equivalent to A$4.20 a share, which Australand rejected on April 23. It returned with a sweetened bid before Frasers’s higher offer.

Australand’s board in December 2012 rejected a bid by GPT Group, Australia’s second-biggest property trust, to acquire Australand’s industrial and commercial property divisions. GPT dropped its pursuit in May last year after failing to agree on a price that would compensate Australand shareholders for being left with a standalone residential property developer.

Australand shares have risen 16 percent this year. Frasers shares have surged 24 percent since they began trading Jan. 9.

(Corrects story published yesterday to add intraday price for Frasers Centrepoint in second paragraph.)
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