Emira spurns Arrowhead’s ‘unsolicited’ takeover move
EMIRA Property Fund has rejected the expression of interest by Arrowhead Properties in acquiring the diversified property company.
Arrowhead’s executive said on Monday it believed the two companies’ property portfolios would complement one another, and that taking over Emira would boost the liquidity of Arrowhead and attract larger shareholders. Arrowhead said it was considering offering 1.67 of its shares for each Emira share. But Emira’s board said on Thursday Arrowhead’s takeover move was opportunistic.
The board said it had rejected Arrowhead’s “unsolicited, non-binding, and highly conditional expression of interest to acquire all of Emira’s issued share capital”, as it has no benefit to shareholders of Emira.
“The board has considered Arrowhead’s conditional expression of interest, and we believe it’s clearly not in the best interests of Emira shareholders,” said Ben van der Ross, the chairman of Emira.
“The proposal is highly opportunistic. The very low share swap ratio proposed represents a discount to Emira’s current price, and Emira has also traded at a premium to the ratio for the vast majority of the last 12 months. Fundamentally, the ratio is also at a substantial discount to Emira’s net asset value,” he said.
Emira CEO Geoff Jennett said the fund had worked to sell many of its low-quality office assets over the past few years.
Arrowhead’s office properties would not fit into Emira’s strategy.
“Arrowhead’s assets overall are of a lower quality than ours, especially their offices. We are also probably three times more liquid than they are.
“I think Arrowhead saw that our share price was in a weak position and felt there was an opportunity,” he said.
Emira in June became the first property stock to forecast negative distribution growth in the coming results season.
The company warned that for the financial year ending June 30 2017, it expected distributions to shrink 2%, when compared with the expected distributions for the financial year ended June 2016.
Emira has not yet released its June 2016 results.