A consortium of US investors including New York Stock Exchange-listed self-storage group Public Storage is making a $1.9 billion takeover play for Abacus Storage King (ASX: ASK) – Australia’s second-largest player in the sector.
Abacus Storage King, which operates more than 200 Storage King outlets in Australia and New Zealand, has received a conditional and non-binding indicative proposal from Public Storage (NYSE: PSA) and Ki Corporation to acquire all the stapled securities in the group for $1.47 per share.
The offer price is at a significant premium to the group’s close last Friday of $1.16 per security and well above the initial issue price of $1.41 in August 2023 when Abacus Group (ASX: ABP) spun off the Storage King assets into a separate listed entity.
Abacus Storage King, which received the joint offer from Ki Corporation and Public Storage after the market closed last Friday, says the indicative offer price will be reduced by any dividends or distributions declared by the group after the date of the indicative proposal announcement.
Through the planned acquisition, Public Storage and Ki Corporation would own 50 per cent each of Abacus Storage King which had an estimated $2.14 billion in net assets at the end of December last year.
Public Storage is the world’s largest owner, operator and developer of self-storage facilities with 3,380 sites in the US servicing about two million customers.
The proposal from the US consortium is subject to several conditions, including due diligence as well as approvals from the Foreign Investment Review Board and the New Zealand Overseas Investment Office.
The buyout partners are also seeking a binding ruling from the Australian Taxation Office confirming that Abacus Storage Property Trust would qualify as a withholding managed investment trust.
The takeover proposal follows a solid earnings performance by Abacus Storage King in the first half of FY25 as funds from operations surged 15.1 per cent to $43.3 million.
The $1.47 offer price for the group compares with a net tangible asset backing of $1.60 per stapled security.
Abacus Storage King also has a growth pipeline comprising 19 new developments, which will expand existing group net lettable area by 17 per cent, as well as six planned expansions of existing sites over the short to medium term.
The Storage King business is heavily focused on metropolitan markets and over the latest half-year saw revenue per available metre increase by 5.4 per cent to $339 per square metre. This was driven by rental rate growth of 4.4 per cent to $373 per square metre and a 90-basis-point increase in occupancy to 91 per cent.
Abacus Storage King says it has established an independent board committee comprising the group’s independent directors to assess the indicative proposal. However, it has yet to form a view on the merits of the proposal.
Shares in Abacus Storage King shot to a high of $1.335 at the open this morning despite a sharp slide in the broader market.
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