Asian fund manager PAG Real Estate has launched a HK$6.15bn (€699.5m) takeover bid for HK-listed Spring Real Estate Investment Trust (REIT).
RE Strategic Investments, a subsidiary of PAG, has made the voluntary offer to pay HK$4.85 for each unit of Spring REIT. The offer represents a 61.7% premium to Spring REIT’s unit closing price on Monday.
The offer is subject to the condition that PAG receives more than 50% acceptance. PAG and parties acting in concert with it held 188,031,400 units, representing around 14.818% of the issued units.
PAG also said it will go ahead with the offer if the recently announced proposal by Spring REIT to buy a shopping mall in Huizhou, Guangdong province is not approved by independent unitholders at an upcoming meeting.
Broderick Storie, a partner at PAG Real Estate, said: “This offer represents a very significant 61.7% premium, in addition to being well above the highest price Spring REIT has ever traded, and some 27% above its initial IPO price. Anyone accepting the Offer should exit at a profit.
“Spring REIT holders have to weigh up this tremendous cash premium against the downside risks and uncertainty of remaining invested with Spring REIT’s current Manager; particularly amid general stock market conditions and an increasingly erratic and dilutive acquisition strategy being pursued by Spring REIT’s Manager.”
Storie said the questionable attempt to acquire a Guangdong shopping mall is just the latest demonstration of how Spring REIT’s current manager has failed to improve governance and decision making.
“We need unitholders’ support to reach our 50% acceptance condition. The offer allows Spring REIT Unitholders to realise a certain cash gain on their units, and enjoy a profitable exit from Spring REIT.”
Spring REIT owns and invests in income-producing real estate primarily in Mainland China, while seeking yield-accretive investment opportunities globally. Spring REIT is managed by Spring Asset Management Limited.