DEXUS Property Group has made a conditional, non-binding $2.5 billion cash and scrip bid to merge with the ASX-listed Investa Office Fund, which has a nationwide portfolio of assets that includes two Perth office towers.
Under a process deed agreement announced today, Dexus has offered 0.4240 of its shares and 82.29 cents per IOF unit, valuing shares in IOF at an average of $4.11.
The implied total value of IOF is $3.52 billion, Dexus said in a statement to the ASX.
IOF, which is a listed fund associated with Investa Property Group, has around $3.5 billion worth of assets under management, comprising 22 properties across Australia, which are collectively 93 per cent occupied.
In Perth, IOF owns Wellington Central at 836 Wellington Street, and Subsea House at 66 St Georges Terrace.
If the deal goes ahead as announced, Dexus’s assets under management would grow to $23.4 billion, $16.6 billion of which would be office property.
Investa Listed Funds Management has been seeking to sell IOF since a strategic review earlier this year, after Morgan Stanley moved to sell its stake in the fund, as well as its holdings in Investa Property Group.
Several potential parties were contacted, and in August Mirvac Group was granted a period of exclusivity to advance negotiations to buy IOF, however a deal was unable to be reached.
Dexus was another of those potential suitors, with the Investa independent board committee today saying it believed the Dexus offer was superior to any alternatives investigated as part of the review.
Investa Listed Funds Management independent chair Deborah Page said the directors were pleased to be able to provide an attractive value proposition to IOF shareholders.
“It is particularly pleasing that this proposal, if implemented, will see IOF unitholders being offered the opportunity to invest in a combined Dexus-IOF entity that will be Australia’s pre-eminent, internally managed office platform,” she said.
“I am also pleased that if the proposal reaches implementation, our Australian office assets of approximately $3.5 billion would continue to be held in a listed format and that the enlarged entity would have the potential to offer significant earnings and distribution accretion to IOF unitholders.”