Axiom announces Eumundi takeover bid

Perth-based property developer Axiom Properties Ltd has made a takeover bid for Queensland property group Eumundi Group Ltd after acquiring 17 per cent of the company for $4.3 million.

The news came one day after the company recorded a 57 per cent decrease in its half year net loss to $202,000

Axiom managing director Ben Laurance said his company would make a one-for-one share bid for the Brisbane-based company, which he said would give Eumundi shareholders a 30 per cent premium on their share holding.

Mr Laurance said that all Axiom's current equity requirements were being funded from internal resources.

The full text of a company announcement is pasted below

Axiom Properties Limited, the WA-based property developer controlled by Peter Laurance's Pivot Group, has paid $4.3 million for 17%of Eumundi Group Limited and has now announced a one-for-one share bid for the balance of the company.

Eumundi is a Brisbane-based property investor and developer with Queensland commercial and retail assets, which has a market capitalisation of $22 million.

Based on Axiom's closing share price yesterday of 34 cents, the one-for-one share offer would give Eumundi shareholders a 30% premium to its closing share price yesterday of 26 cents. The offer is dependent upon acquiring 50.1% of Eumundi's issued capital and the other conditions set out in Annexure A.

Axiom bought its initial stake from pub baron Tom Hedley for 30 cents per share.

The Finance Director of Hedley Group, Steven Donnelly, said: "We have held a significant investment in Eumundi for 18 months."

"We would have preferred to take Axiom shares for our Eumundi shares, but we are strongly focused on growing our portfolio of pubs at present," Mr Donnelly said.

The Managing Director of Axiom, Ben Laurance, said there was a strong synergy between the two companies, and he and his fellow directors were confident that Axiom could unlock value from Eumundi's assets by more active management.

"We have undertaken a review of Eumundi's assets and activities, and it would appear the share market believes they have not fully realized their value in a strong property market," Mr Laurance said.

"Axiom has offices and is currently developing property in Perth, Adelaide and Melbourne, and we believe Eumundi shareholders would benefit from being part of a larger group with a national focus," Mr Laurance said.

"My father's company, Pivot Group, has had a long association with Queensland, having bought Sea World in 1984, and then expanded and managed it successfully for 10 years, during which time it became a founding partner of Warner Bros. Movie World," Mr Laurance said.

"Whilst Axiom only has a small commercial development currently in Queensland, we are very confident about the future of that State, and if our bid is successful we intend to keep the Eumundi office, and all of its staff to maximise the value of its assets, especially those that have development potential," Mr Laurance said.

Pivot Group assumed control of Axiom in April last year after shareholders voted overwhelmingly in favour of Pivot's offer in preference to a competing offer from Macquarie Bank, which is a joint venture partner with Axiom in a canal subdivision near Busselton in W.A.'s booming South-west.

Nearly a third of the 621 lots in the Port Geographe project have now been sold for more than $100 million.

Following the takeover, Axiom was the best performing property stock on the ASX for the 2005-2006 financial year.

Mr Laurance said: "For 35 years, Pivot Group has been one of the most successful commercial property developers in Australia, and it has a strategic alliance agreement to offer every one of its projects to Axiom at valuation."

"This gives Axiom shareholders access to commercial projects in all States, and enables it to leverage its equity for better returns," Mr Laurance said.

"Already through this relationship, Axiom has two joint ventures with the $4 billion Industry Superannuation Property Trust in the $200 million Century City office project currently under construction at 100 St George's Terrace, Perth, and 50% ownership of "The Age" newspaper site in Spencer Street, Melbourne," Mr Laurance said.

"We think Eumundi shareholders will appreciate the opportunity to enhance the value of their assets, and be part of Axiom's business plan for growth," Mr Laurance said.

Mr Laurance said that all Axiom's current equity requirements are being funded from internal resources.