AVID Property Group has fended off Singapore property giant Ho Bee Land in the battle to secure control of Australian homebuilding group AVJennings (ASX: AVJ) despite scaling back its offer price to $365.6 million.
AVID Property, in partnership with Proprium Capital Partners, has signed a scheme implementation deed to acquire all the shares in AVJennings for 65.5c per share – down from the original indicative offer of 67c per share.
AVJennings, which as recently as 24 February revealed it was still negotiating with both Ho Bee Land and AVID Property Group to secure a binding proposal, says today that it has terminated all discussions with Ho Bee which was prepared to pay 70c per share ahead of any due diligence – valuing AVJennings at $390 million.
The homebuilder says Ho Bee Land has failed to put forward a binding proposal, leading the company to accept the downgraded offer from AVID Property Group.
“Following completion of extensive due diligence over the last four months, the-all cash scheme consideration has been reduced by 1.5c to 65.5c in cash per AVJ share,” says the company.
“Given a binding proposal from Ho Bee Land has not been forthcoming and following careful consideration of the revised AVID proposal, the AVJ board determined to formally agree the scheme with AVID.
“AVJ’s directors believe the revised scheme consideration provides AVJ shareholders with certainty of value at a substantial premium to AVJennings’ undisturbed trading levels, historical trading benchmarks and precedent Australian real estate transactions.”
AVID Property Group and Proprium Capital Partners first announced their takeover plans for AVJennings in November last year, move that is set to almost triple AVID’s existing portfolio comprising 6,300 residential lots with a gross revenue pipeline of $5 billion.
AVJennings has a pipeline of almost 10,000 residential lots in its portfolio which comprises 45 projects in NSW, Victoria and Queensland.
The deal comes more than five years after AVID secured Gold Coast-founded developer Villa World in a $410 million takeover.
The US-based Proprium Capital, the company that manages AVID Property Group on behalf of global institutional investors, last year further bolstered its Australian real estate holdings through the $284.5 million acquisition of the Puljich family’s Living Gems business to create the $1.1 billion Vantage land-lease-communities portfolio of about 3,800 sites across 14 projects.
Ho Bee Land, which was formerly the largest shareholder in Villa World before AVID Property Group’s takeover, stepped into the battle for AVJennings in January with an indicative offer price of 70c per share.
The company had a 5.39 per cent stake in AVJennings at the time after picking up shares in the company in December last year, shortly after AVID's takeover play.
Under the scheme implementation deed announced today with AVID Property Group, AVJennings is permitted to pay a fully franked special dividend on or before the scheme record date which will allow shareholders to receive up to 7.2c per share in franking credits.
While the amount of the special dividend to be paid remains subject to tax rulings, the availability of funds and lender consents, the cash consideration to shareholders will be reduced by the total of any special dividend paid.
The scheme is also subject to shareholder approval. SC Global Developments Pte Ltd, which controls 54.02 per cent of AVJennings shares, has confirmed that it plans to vote in favour of the scheme unless a better offer is presented.
The takeover remains subject to approvals from both the Australian Foreign Investment Review Board and New Zealand Overseas Investment Office.
AVJennings shares were last trading at the offer price of 65.5c, up 5c, at 10.48am (AEDT).
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