Blackstone has made an all-cash AUD3.1bn (€2bn) bid for Investa Office Fund (IOF), a major office landlord in Australia.
The offer price from the US investor is AUD5.25 per security for IOF, which reflects a premium of 16% over the vehicle’s weighted average one-month traded price.
IOF directors said they had unanimously recommended the Blackstone proposal to unitholders.
Blackstone is to undertake further “confirmatory” due diligence over the next four weeks and at the end of which, it will submit a binding offer for IOF.
Speaking to analysts, Richard Longes, chairman of the responsible entity, Investa Listed Funds Management (ILFM), said the transaction would be done through a trust scheme, which must be approved by 75% of IOF unitholders.
“I was approached by Blackstone in early April with a non-binding indicative bid to buy all IOF units,” said Longes.
ILFM directors had rejected the initial proposal, and Blackstone came back with an increased offer of AUD5.25 per unit, he said.
“The offer price is higher than any IOF traded price since 2008,” Longes said.
“The directors have formed the view that the proposal is worthy of consideration by IOF unitholders,” he said.
“The directors are intent on entering a scheme of arrangement and to unanimously recommend that IOF unitholders vote in favour of Blackstone’s proposal in the absence of a superior proposal.”
The other conditions are subject to regulatory approval and independent expert support for the proposal.
IOF owns 22 buildings, including some of the best in Sydney and Melbourne. They were valued at AUD4bn at December 31, 2017.
The Blackstone bid is the third takeover attempt on IOF. It attracted a bid from the listed Australian REIT, Dexus, in 2016, then entered into a protracted bid from Cromwell Property Group.
Cromwell in October last year sold its near 10% stake to ICPF for AUD276m.
ICPF is the largest shareholder with a 20% stake in IOF. ICPF is also the 100% owner of management rights to IOF.