Businessman and professional poker player Chuc Hoang has failed in his latest attempt to block a rival bid in the protracted shareholder battle for control of €700 mln Paris office REIT Société de la Tour Eiffel (STE).

Businessman and professional poker player Chuc Hoang has failed in his latest attempt to block a rival bid in the protracted shareholder battle for control of €700 mln Paris office REIT Société de la Tour Eiffel (STE).

On 11 June the Paris court of appeal dismissed an application by companies controlled by Hoang for a stay of execution on an improved offer made by French mutual insurance group SMABTP. This follows a ruling by France's financial markets authority (AMF) on 29 April that SMABTP complied with the regulations.

Huang, who holds a 30% stake in STE, and his companies, MI29, Eurobail and Foncière Wilson, has been battling for control for most of this year. The French-Vietnamese poker player has been extremely critical of STE's management, alleging last year that managers were guilty of abuse of power and misuse of corporate assets. He also questioned STE's decision in 2013 to acquire a Paris office building from UK private equity firm Patron Capital through a new share issue. Patron broke off talks shortly thereafter.

The Paris commercial court has dismissed all of his claims. Hoang tried to halt SMABTP’s improvement on its initial bid but his claims were rejected by the Paris commercial court. He then lodged an application for the stay, but this has now been dismissed by the appeal court.

The AMF announced on 12 June that the timetable for the improved SMABTP offer would be set at a later stage to align with the closing date with the competing offer filed by Eurobail.

THE BIDS
Earlier this week, PropertyEU reported that Hoang made an improved bid of €55 per share for STE, outbidding SMABTP's €53-per-share bid. The offer price is largely in line with STE's current share price and compares to a NAV per share of nearly €60 at year-end 2013.

Hoang's bid values STE at €344 mln, and is being partly financed by funds advised by US private equity group Colony Capital through the subscription of bonds that are partly redeemable in STE shares, for up to 10% of the firm.

Hoang said he would aim to keep STE's REIT status, which would bind him to a holding of no more than 60%. He said he would adjust the company's strategy and extend debt maturities before resuming property acquisitions to rebalance its portfolio.

Hoang's counter offer was a response to SMABTP's own improved offer of €53 a share cash offer in April, which was recommended by STE's management.

SMABTP, the leading insurance group in France for the construction and public works sector, said it will withdraw the offer if it does not obtain at least 40% of Tour Eiffel's share capital. It did not guarantee to STE that it will maintain its REIT status.

HISTORY
STE was founded by engineer Gustave Eiffel in 1889 to manage his iconic Parisian landmark, the Eiffel Tower. The company became a 'quoted empty shell', according to STE's website, when it lost the Eiffel Tower management concession to the city authorities in 1979.

It remained in this state until 2003 when two businessmen, Mark Inch and Robert Waterland - with the backing of Soros Real Estate Investors - took control and transformed it into a SIIC, French real estate investment trust, concentrating on commercial real estate. By 2007 STE had €1.2 bn of assets under management.

Five years later the company had assets of just under €1 bn and decided to 'adopt a more prudent outlook'. The following year Inch and Waterland were replaced by a new management team, which undertook a debt refinancing and sold non-core assets as part of a strategic refocusing on Paris offices outside the central business district.

Currently STE has a €701 mln portfolio comprising 393,360 m2, some 65% of which is Paris offices. If its bid is successful, SMABTP said it plans to double the portfolio within the next three to five years while providing liquidity to reduce loan-to-value.