Perth-based property group Peet says it will break new ground with a $76 million all-cash takeover offer for eastern states-based residential development group CIC Australia.
Peet today announced it would offer 60 cents for each CIC share, representing a 4.8 per cent discount to the target’s last closing share price from April 9.
A majority of CIC’s board and independent directors have recommended shareholders accept the offer.
CIC managing director Colin Alexander also confirmed he would accept the offer for his 4 per cent stake in the company.
CIC currently has seven active projects in the ACT, NSW, South Australia and the Northern Territory, with over 500 exchanged contracts worth $148 million.
SA, the ACT and the NT are new markets for Peet, which already has a significant presence in NSW, Queensland and Victoria.
Merril Lynch has been appointed to act as Peel’s financial advisor, while King & Wood Mallesons will act as legal advisor.
Peet managing director Brendan Gore said the acquisition was consistent with the company’s strategy to acquire and develop assets in a capital-efficient manner.
“CIC’s business – with its joint venture and co-investment relationships – complements our strategy, and enables Peet to receive development management and sales fees as well as development profits on these investments,” Mr Gore said.
“We will work with the CIC team to further expand those co-investment relationships in the future.”
Mr Gore said the acquisition would increase Peet’s land bank to more than 53,000 lots with a gross development value exceeding $10 billion. Peet said it would undertake three separate share placements to raise $124 million to fund the acquisition, and boost working capital.
The placements will comprise a $54 million unconditional underwritten placement for institutional investors; a $66 million placement for institutions, conditional on the takeover offer becoming unconditional; and an $8 million, non-underwritten placement to companies associated with Peet chairman Tony Lennon.
A share purchase plan capped at $8 million for eligible shareholders will boost the raising to $132 million, Peet said.
Peet said $83 million would be applied to fund the acquisition, as well as transaction costs, while $41 million would be used to support repayment of CIC’s multi-option finance facility.
Peet shares entered a trading halt prior to the announcement this morning, having last traded at $1.40. At 1:19PM, WST, CIC shares were down 4 per cent, trading at 60.5 cents.
