Australia-listed land-lease community operator Ingenia Communities Group has rejected an improved AUD2.06bn (€1.47bn) cash takeover proposal from private equity firm Warburg Pincus, saying the offer continues to undervalue the business, according to Private Equity Wire. The latest approach was submitted on 14 September and would see Warburg Pincus pay AUD5.05 per Ingenia share in cash, according to Private Equity Wire.
Terms of the revised Warburg Pincus proposal
The revised proposal represents an increase of almost 6.3% on Warburg Pincus’s initial AUD1.94bn bid made on 30 August, according to Private Equity Wire. The proposal represents a 16.9% premium to Ingenia’s share price before the bid process began.
Warburg Pincus made the revised approach as it seeks to secure control of the Australian residential communities operator. Warburg Pincus argued that the revised proposal offered Ingenia shareholders an attractive all-cash alternative to Ingenia’s planned Peet acquisition and provided a basis for further negotiations and due diligence.
“Warburg Pincus is disappointed by Ingenia’s decision not to engage on our materially improved proposal,” the private equity firm said.
Ingenia board response and the Peet condition
Ingenia’s board said the revised proposal remained insufficient and was not in the best interests of shareholders. Ingenia’s board also said the revised proposal retained a condition requiring Ingenia to abandon its proposed AUD711m acquisition of master-planned communities developer Peet.
The Peet transaction is viewed by Ingenia as an important part of its long-term growth strategy. Ingenia has maintained that its planned expansion provides a strong platform for future development.
Ingenia said its board remained willing to assess proposals that it considered to represent compelling value, while reiterating its confidence in the company’s existing strategy and growth prospects.
Market reaction and investor feedback cited by Citi
Ingenia shares rose as much as 2.6% to A$4.43 on Monday, their highest level since mid-August. Citi analysts said feedback from investors suggested there was scope for a higher cash offer.
Citi analysts said an all-cash bid in the AUD5.25 to AUD5.50 range could prove compelling in the near term given uncertainty surrounding Australia’s residential property market.
Widely known context: In public-company M&A, non-binding proposals can be revised multiple times as bidders seek to gain board engagement and access to due diligence. Widely known context: Deal conditions that require a target to abandon a separate acquisition can affect board willingness to engage on a proposal.
