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02-07-2014, 10:24 PM
Frasers Centrepoint’s $2.6 billion bid a ‘knockout’ blow
GREG BROWN AND SARAH DANCKERT THE AUSTRALIAN JULY 03, 2014 12:00AM
Sarah Danckert
Property Reporter
Melbourne
SINGAPORE-listed Frasers Centrepoint’s bid for Australand has won the backing of analysts and fund managers who have described the $2.6 billion deal as a “knockout” blow for rival bidder Stockland.
Frasers on Monday struck an implementation agreement to move forward on its all-cash bid for Australand.
Speculation is growing that Australand’s largest shareholder and rival bidder Stockland, which holds a 19.9 per cent stake, will either sell its stake into the offer or cut a deal with Frasers.
Frasers needs 50 per cent of shareholders to control Australand. But its likely preference would be to privatise Australand and then amalgamate it into its larger business on the Singapore exchange, according to sources.
To do this, it needs 90 per cent of shareholder acceptances, giving Stockland a deciding voice.
While some analysts argue that Stockland will use its position to leverage a portfolio of assets, Morningstar analyst Tony Sherlock expects Stockland to “walk away and take the (share) profits”.
“(Stockland has) got a very good return (on its share investment) in a very short period of time,” he said, adding that it may negotiate on properties that were not core to Frasers’ bid.
Mr Sherlock said 40 per cent of Australand’s shares had been picked up recently by institutional investors that would quickly accept the offer as they received quick returns.
Brett McNeill of Antares Capital Partners, which has a 2.65 per cent stake in Stockland, said the Frasers bid was a “knockout”.
“It is a significant premium to net tangible asset backing, and implies a large earnings multiple for the development business. Beating it would appear to require some very aggressive assumptions around future growth and value,” Mr McNeill said.
A spokeswoman for Stockland declined to comment on whether it would increase its bid or sell its stake into the Frasers deal.
GREG BROWN AND SARAH DANCKERT THE AUSTRALIAN JULY 03, 2014 12:00AM
Sarah Danckert
Property Reporter
Melbourne
SINGAPORE-listed Frasers Centrepoint’s bid for Australand has won the backing of analysts and fund managers who have described the $2.6 billion deal as a “knockout” blow for rival bidder Stockland.
Frasers on Monday struck an implementation agreement to move forward on its all-cash bid for Australand.
Speculation is growing that Australand’s largest shareholder and rival bidder Stockland, which holds a 19.9 per cent stake, will either sell its stake into the offer or cut a deal with Frasers.
Frasers needs 50 per cent of shareholders to control Australand. But its likely preference would be to privatise Australand and then amalgamate it into its larger business on the Singapore exchange, according to sources.
To do this, it needs 90 per cent of shareholder acceptances, giving Stockland a deciding voice.
While some analysts argue that Stockland will use its position to leverage a portfolio of assets, Morningstar analyst Tony Sherlock expects Stockland to “walk away and take the (share) profits”.
“(Stockland has) got a very good return (on its share investment) in a very short period of time,” he said, adding that it may negotiate on properties that were not core to Frasers’ bid.
Mr Sherlock said 40 per cent of Australand’s shares had been picked up recently by institutional investors that would quickly accept the offer as they received quick returns.
Brett McNeill of Antares Capital Partners, which has a 2.65 per cent stake in Stockland, said the Frasers bid was a “knockout”.
“It is a significant premium to net tangible asset backing, and implies a large earnings multiple for the development business. Beating it would appear to require some very aggressive assumptions around future growth and value,” Mr McNeill said.
A spokeswoman for Stockland declined to comment on whether it would increase its bid or sell its stake into the Frasers deal.