The Cromwell Property Group (ASX: CMW) share price is climbing today after ARA Asset Management Limited (ARA) added a sweetener to its hostile takeover bid. The Cromwell share price is currently trading 3.4% higher to 91 cents.
News of the takeover bid by Singapore-based ARA Management became public on June 23 when the Cromwell board strongly advised against the move.
Which companies are involved?
Cromwell is a diversified real estate investor and manager with operations on three continents and a global investor base. Cromwell has a market capitalisation of $2.3 billion. As of 31 December 2019 the company had a direct property investment portfolio valued at $3.2 billion and total assets under management of $11.9 billion across Australia, New Zealand and Europe.
ARA Asset Management is an Asia Pacific real assets fund manager with a global reach. As at 31 December 2019, the ARA Group managed SGD$88 billion in gross assets across 28 different countries. The ARA Group is headquartered in Singapore and boasts that its investors include some of the world’s largest pension funds, sovereign wealth funds, financial institutions, endowments and family offices.
How the takeover offer unfolded
Cromwell shares rallied on June 24 following news that ARA intended to acquire 29% of all Cromwell stapled securities in which it did not already hold an interest. If successful, this would take ARA’s stake in Cromwell to 52.6%. Cromwell management was – and still is – strongly against any takeover.
On July 21, Cromwell responded strongly to ARA’s proportional bid telling investors to “ignore ARA’s opportunistic proportional takeover offer and misleading statements”. The company also said that ARA’s bidders statement contained “material omissions and failed to disclose their true intentions”.
However, it did conclude that ARA should not seize control without paying a premium. The latest offer has increased the amount ARA would pay.
ARA’s latest offer
Today, the Cromwell share price is on the rise after ARA upped its offer for Cromwell shares by 4.4 per cent. This comes as it seeks to win over everyday retail security holders and lift its stake through market purchases in Cromwell.
It remains to be seen if Cromwell shareholders will accept the higher offer. ARA has stated that in the absence of a competing proposal emerging, it will not increase its offer further.
The higher offer means the Singapore-based company has raised its bid by just $32 million, despite the overall bid being worth around half a billion dollars.