HomeCo Daily Needs (HDN) real estate investment trust (REIT) is set to become a $3.2 billion operation under a proposed takeover of rival REIT Aventus.
HDN, capitalised at $A1.2 billion, said the takeover terms imply a value of $3.82 per Aventus security.
Aventus closed at $3.31 on Friday with a market value at the time of $2.037 billion.
News of the proposed takeover saw the securities jump 9% to an all-time high of $3.62 as punters bet on the possibility a rival bidder. The shares later retreated to $3.46 to be up 4.5% for the day.
The offer comprises 2.2 units of HomeCo Daily Needs REIT for every 1 unit in Aventus Retail Property Fund, and $0.285 cash or 0.038 Home Consortium securities for every 1 share in Aventus Holdings Ltd. That implies a price of $3.82 for each Aventus security.
The enterprise value of the merged group will be $4.3 billion (that’s including debt) in a deal that will link supermarket-anchored neighbourhood centres and big-format retail malls.
The two groups own and manage malls that specialise in food and discretionary retailers that service ‘daily needs’ shopping.
HomeCo Daily Needs was spun out of the listed Home Consortium business.
HomeCo CEO, David Di Pilla said the logic of this transaction is very compelling for HomeCo Daily Needs unitholders and Aventus security holders.
“The combination of HomeCo Daily Needs REIT and Aventus creates a leading ASX listed Daily Needs REIT with a highly strategic $4.1 billion portfolio of last mile logistics infrastructure in Australia’s leading metropolitan growth corridors,” he said in Monday’s statement.
“This transaction is consistent with our strategy to build high quality portfolios exposed to powerful megatrends and enhanced by best-in-class management teams.”
There’s also the merged group’s future with a combined 2.5 million square metre landbank across the major metropolitan markets of Sydney, Melbourne, Brisbane, Perth and Adelaide.
The Aventus Board has unanimously said the merger to be in the best interests of shareholders and recommends that they vote in favour of it. This is in the absence of a superior proposal and subject to the independent expert’s report.
Aventus’ Chair, Bruce Carter said in Monday’s statement “The merger is attractive for Aventus securityholders, both because of the potential offered by being part of the larger merged groups and because the offer reflects a material premium to Aventus’ trading price and its NTA.”
The biggest question mark for these retailing investment groups is whether consumers still flock to them as the country re-opens and destination malls run by the likes of Scentre (Westfield), and GPT regain some of their lustre.