Hotel Property Investments rejects $710m takeover bid
A $710 million takeover bid has been made for pubs landlord Hotel Property Investments (HPI), which owns 58 pubs.
Behind the $3.65-a-share bid is ASX-listed diversified real estate investments giant Charter Hall – Australia’s largest pubs owner – and hospitality industry superannuation fund Hostplus.
HPI, which listed on the ASX in 2013, has so far rejected the bid, telling investors that the deal is a tiny premium on its share price and lower than the value of its total assets.
“The board has unanimously concluded that the offer is opportunistic, not compelling and materially undervalues HPI,” the HPI board said in a statement on Monday morning. “HPI believes that its existing portfolio and current strategy, including its organic growth initiatives, offer significantly greater value to HPI securityholders.”
Charter Hall and Hostplus first worked together three years ago, when the former acquired ALE Group for $1.7 billion and took charge of some of the country’s best-known pubs, including Young & Jackson in Melbourne.
The $3.65-a-share offer for HPI was launched by Charter Hall's retail real estate trust and a Charter Hall-managed trust acting on behalf of Hostplus. Following the announcement on Monday, HPI shares climbed 5.46 per cent to $3.67.
Barrenjoey and Citi have been appointed as financial advisors to the bidders, while HPI has engaged Bank of America and Denison Partners as defence advisors.
Charter Hall already holds a substantial stake in HPI, having acquired a near 15 per cent interest through its Charter Hall Retail REIT at $3.35 a share in March.
This latest move has fuelled speculation about Charter Hall's long-term intentions, given its history of taking property players private. One such example is the acquisition of Irongate, an office and industrial real estate firm with a $1.7 billion portfolio, in 2022.
Charter Hall said the takeover offer is fully funded and provides an attractive premium to HPI’s historical trading levels.
There are currently no competing offers.
“The proposed acquisition of HPI alongside Hostplus is attractive and designed to deliver significant benefits to both HPI security holders and Charter Hall Retail REIT unitholders,” Charter Hall retail chief executive Ben Ellis said.
“The acquisition is in line with Charter Hall Retail REIT’s strategy to invest in high-quality, net lease retail assets, while partnering with leading convenience retailers to deliver resilient and growing income streams.”
HPI's pubs are leased to Australian Venue Co, a significant hotel operator that was recently acquired by PAG Asia Capital for $1.45 billion. KKR, the previous owner of Australian Venue Co, completed the sale earlier this year.
Jonathan Jackson, 10th September 2024
