Charter Hall Retail (CHR) and HostPlus have today announced a joint takeover to acquire all the securities in Hotel Property Investments (HPI) that CHR does not currently own, subject to a 50.1 per cent minimum acceptance condition and other limited conditions.
The bid stands at $3.65 per HPI security, which the CHR and HostPLus bidder’s statement says “represents an attractive premium to HPI’s historical trading levels”.
CHR and HostPlus said that each business would contribute 50 per cent of the cash consideration to acquire HPI and that each would indirectly own 50 per cent of the acquired business.
The bidder’s statement also included details on why Charter Hall Retail and HostPlus believe HPI shareholders should accept the offer.
These included:
- The Offer delivers an attractive premium to HPI’s historical trading levels
- All cash Offer allows you the opportunity to realise value for Your HPI Securities with the certainty of cash consideration
- No competing offer has emerged for your HPI Securities and the Bidder considers the likelihood of a competing proposal emerging is low
- The Offer removes your exposure to the risks and uncertainties associated with a continued investment in HPI Securities
- HPI’s Security price may fall if the Offer lapses
- There may be a reduction in liquidity in HPI Securities if the Bidder further increases its interest in HPI thereby reducing the free float of HPI Securities
- If you do not accept the Offer and the Bidder further increases its interest in HPI, you risk becoming a minority HPI Securityholder in an entity controlled by the Bidder (and in that scenario future distributions may be reduced and HPI may be delisted from ASX)
- You will not incur any brokerage cost or stamp duty with your acceptance of the Offer (other than as set out in section 11.13)
- The Offer is subject to a limited number of conditions, including a Minimum Acceptance Condition which requires only that the Bidder holds or has received acceptances for at least 50.1 per cent of the HPI Securities before the end of the Offer Period.
Ben Ellis, CHR’s CEO said: “The proposed acquisition of HPI alongside Hostplus is attractive and designed to deliver significant benefits to both HPI Securityholders and CHR Unitholders. The acquisition is in line with CHR’s strategy to invest in high quality, net lease retail assets, whilst partnering with leading convenience retailers to deliver resilient and growing income streams.
“Hostplus is an existing partner through our investment in LWIP 2 and we are pleased to extend our partnership through the proposed acquisition of HPI.”
However, the HPI Board has said it was verbally briefed about “the unsolicited and conditional offer” over the course of the weekend.
HPI’s statement on offer said: “The Board has unanimously concluded that the Offer is opportunistic, not compelling and materially undervalues HPI as it represents:
- A minimal 4.9 per cent premium to the last closing price of HPI on 6 September 2024;
- A significant discount of c.10 per cent to Net Tangible Assets (NTA) as at 30 June 2024 (adjusting for current accrued distributions); and
- A significant discount to the premium provided in comparable transactions.
“HPI has a unique high-quality portfolio of pub assets with long term leases and strong investment fundamentals providing reliable distribution with forecast distribution growth of 2.6 per cent in FY25.
“The Board intends to formally recommend that securityholders reject the Offer. HPI believes that its existing portfolio and current strategy, including its organic growth initiatives, offer significantly greater value to HPI securityholders.”
The HPI Board also said it will provide “a more fulsome response to the offer” in its Target’s Statement expected to be released in due course. Australian Hotelier and The Shout will keep you up-to-date with all the news regarding this takeover bid.