CEE developer-investor Immofinanz has rejected a higher offer by Austria’s CA Immo and Russia’s O1 Group to acquire a 13.5% stake in the company as ‘much too low’.

CEE developer-investor Immofinanz has rejected a higher offer by Austria’s CA Immo and Russia’s O1 Group to acquire a 13.5% stake in the company as ‘much too low’.

Immofinanz, which has a market capitalisation of about €2.7 bn, said the proposed offer price of €2.80 per share, up from the €2.50 a share bid announced on 25 February, ‘is still much too low’.

‘It is more than one-third below the NAV per Immofinanz share and even lower than yesterday's closing price’, said CEO Eduard Zehetner.

‘On the other hand,’ he continued, ‘we are pleased that both companies see an investment in Immofinanz as more promising than an increase in the O1 holding in CA Immo. This offer by CA Immo also confirms that the company now classifies investments in Russia - in contrast to its previously communicated strategy - through a shareholding in Immofinanz to have significant future potential.’

CA Immo and O1 clarified in a statement that they wish to make a strategic, long-term investment in Immofinanz but do not plan a full takeover.

Boris Mints, board chairman at O1 Group, said, 'We see the current offer as a continuation of our strategy to diversify and expand into Central Europe, that we started by the acquisition of a 26% stake in CA Immo. Both, CA Immo and O1 Group are committed to a long-term role supporting Immofinanz in reaching its full potential.'

Bruno Ettenauer, CEO of CA Immo added: 'For us the acquisition [of a stake in Immofinanz] is an opportunity to further strengthen the market position in our core markets and unlock value in the long run. Following the successful implementation of our strategic programme 2012-2015 resulting in a strong balance sheet and a more focused portfolio with stronger recurring profitability, value-creating growth within our core markets regains priority for CA Immo.'

Russian presence
Immofinanz has built up a significant presence in Russia, where it owns five shopping centres in Moscow and a logistics centre in St. Petersburg. The Russian portfolio generates roughly one-third of its income. In total, Immofinanz owns roughly €6.8 bn of assets across Central and Eastern Europe and Russia.

CA Immo and O1 already hold roughly 3% of Immofinanz shares, but Zehetner said he was sceptical that the duo will be able to gain sufficient shareholder backing for their bid. ‘We cannot imagine that these two parties will be able to accumulate the desired number of shares over the stock exchange at the announced price. We cannot recommend this offer to our shareholders at the announced price,’ Zehetner said.

Zehetner rejected the initial bid of €2.50 per share announced in February as ‘ridiculous’.

O1 Group is one of the largest office owners in Russia and holds a 26% stake in CA Immo after launching an €18.5-a-share offer earlier this year. The investor is believed to have approached Immofinanz shareholder Rudolf Fries about buying his group's 6.5% stake.

Tie-up on the cards
A tie-up between Immofinanz and CA Immo has long been rumoured. Last summer, Zehetner himself suggested that Immofinanz was interested in buying UniCredit's 16.8% stake in CA Immo. That stake was later sold to O1.

CA Immo is a Vienna-listed real estate company with a €3.5 bn portfolio consisting largely of office properties throughout Germany, Austria and Central Europe. The company has a market capitalisation of around €1.6 bn.

O1 Group is a private holding company which owns over 60% of O1 Properties, one of the largest office landlords in Moscow with almost 500,000 m2 of rentable space. Its portfolio includes the flagship $1 bn White Square complex in Moscow.