Two leading Australian property companies aim to combine more than $15.5 billion worth of assets under management (AUM) through a merger that could see Primewest (ASX: PWG) become part of Centuria Capital Group (ASX: CNI).
Within 18 months of Perth-based Primewest listing on the ASX, the group founded by John Bond, Jim Litis and David Schwartz has been offered a mix of cash and CNI shares worth close to $600 million.
The off-market offer represents just a 3 per cent premium on the last closing price of PWG shares, but the bulk of the proposed deal comprises stock in Centuria for the target's shareholders who have seen their shares skyrocket by almost 50 per cent since the 2019 initial public offering (IPO).
The Primewest board, whose directors hold 53 per cent of securities, have unanimously recommended the proposal in the absence of a superior deal.
If the deal goes ahead, Bond, Schwartz and Litis will enter into two-year employment contracts as senior executives of Centuria.
Leadership teams from both companies have described the merger as complementary, allowing for a substantial increase in scale and relevance that would lift Centuria's portfolio by more than half, enhance geographic and sector diversification and open new retail distribution channels.
Sydney-based Centuria's joint CEO John McBain says the merger represents an exciting opportunity to combine two real estate platforms that share similar philosophies and strong track records.
"Primewest has a strong distribution platform and expertise across a range of sectors and geographies which are complementary to Centuria," McBain says.
"Joint CEO Jason Huljich and I will be delighted to welcome the Primewest executives to the Centuria group and look forward to working closely with them to grow the combined platform.
"We believe the merged group will be strategically poised for further growth in the healthcare and agricultural sectors in particular, as well as the traditional real estate sectors."
Centuria chairman Garry Charny says the proposed merger is consistent with the group's dual strategy of asset acquisitions and corporate mergers and acquisitions, when they are "sympathetic" to Centuria's business model.
"Primewest is a high quality, well established fund manager and the Centuria board looks forward to the successful completion of the Merger and building on Centuria's position as a leading Australasian property fund manager."
A bidder's statement will be dispatched by Centuria with the offer period opening in mid-May and closing in mid-June.Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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