Blackstone says it won’t make a better offer
Private equity firm Blackstone Group has pulled out of the battle for an Australian office fund after deciding not to match Oxford Properties’ bid.
OMERS-owned Oxford’s bid of A$5.60 per unit, valuing the fund at $3.35 billion, proved too rich for the America PE giant which will now have some spare funds to focus elsewhere.
In a statement to the Australian Stock Exchange (ASX), office fund manager Investa Listed Funds Management Limited said:
“Blackstone has advised ILFML that it will not provide a matching or superior offer to the Oxford Proposal. As the ILFML Board has determined that the Oxford Proposal is a 'superior proposal' to the Blackstone proposal, the ILFML Board has now withdrawn its recommendation of the Blackstone proposal.”
The Investa Office Fund includes prime office towers in Sydney, where rents are rising fast.
"It is very satisfying to see the considerable value that we have created from our portfolio," commented fund manager Penny Ransom.
Will the deal go ahead?
The statement continues that the board is now recommending the Oxford proposal. The deal will be completed assuming that the independent expert (KPMG Finance) concludes that it is in the best interests of unitholders; and the backing of unitholders.
Commenting on the Oxford Proposal, ILFML Chairman Richard Longes said:
"The Oxford Proposal, which is all cash, priced at a premium to NTA and a premium to the offers received from Blackstone for IOF, represents a superior value proposition. This is an excellent opportunity for IOF unitholders to crystallise their investment in IOF at an attractive and certain price."
There is also the possibility that a last-minute bidder could make a better offer than Oxford’s, although some commentators think that unlikely.
“There’s only the formalities to go through. I think that’s as high as it’ll go,” Winston Sammut, managing director of property investor Folkestone Maxim Asset Management told Reuters.
As well as the unspent Capital, Blackstone will also receive a break fee of around A$32 million from Investa.
