Centuria and Primewest: A merger of equals

Two major consolidations proposed Monday for two very different sectors of the market

The first was in the lithium mining sector on Monday (see separate story) where Galaxy Mining and Orocobre revealed a $4 billion all paper deal, while the second was in property where we saw a much larger $15.5 billion merger proposed between Centuria Capital and Primewest.

If successful, it will lift Centuria into the ASX200 index and give it the opportunity to expand into the lucrative agricultural property sector.

The bid proposal values Primewest at $600 million or $1.51 a share, with 20 cents in cash and 0.473% of a Centuria security for each Primewest Security.

The Primewest board and founders John Bond, David Schwartz and Jim Litis – whose combined holdings control 53% of Primewest – have confirmed they intend to accept the merger in the absence of a superior proposal and subject to the independent expert’s opinion.

They will enter into two-year employment contracts as senior executives of Centuria and have agreed to a two-year escrow arrangement.

Centuria’s joint managing director and founder John McBain said it is his current intention is to retain Primewest’s existing employees given the strong expertise across a range of geographies and sectors which are complementary to Centuria.

“When you look at this merger, it’s a merger of equals,” Mr McBain said in Monday’s announcement.

“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 has been syeadily growing itself in the past few years with the acquisition of the Augusta Capital funds management business in New Zealand, the Heathley Ltd healthcare fund and the 360 Capital industrial portfolio.

Despite the lock-down in 2020, the group bought the $417 million Telstra data centre in the Melbourne suburb of Clayton and the $NZ178 million ($166m) Visy Glass factory in Auckland.

It also boosted its healthcare business with $369 million of private day hospitals and medical centres and $631 million worth of cold storage facilities.

Primewest paid $75 million for Seven West Media’s Perth HQ in May last year.

Centuria securities eased 0.7% to $2.75 and Primewest securities were up 4.7% to $1.535.

 

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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