The APN Property Group Ltd (ASX: APD) share price is climbing higher than a skyscraper today. At the time of writing, shares in the real estate investment manager are selling at 90 cents – a 47.5% increase on the previous day's close.
The sharp price rise comes after APN announced it has agreed to the DEXUS Property Group (ASX: DXS) offer to buy 100% of the company for 91.5 cents a share. The Dexus share price is currently $10.28 – up 0.29%.
Let's take a closer look at today's announcement.
APN share price surges on takeover
In a statement to the ASX, APN Property Group reported it has received, and is recommending shareholders accept, the offer from Dexus for control of the company. According to the statement, all directors are unanimous on this assessment and intend to vote as such. The directors control 33% of the company.
The offer of 91.5 cents represents a:
- 50.0% premium on the previous day's APN share price.
- 64.3% premium over the 1-month volume-weighted average price.
- 65.8% premium over the 3-month volume-weighted average price.
The takeover bid will be subject to the standard caveats before it can be implemented, namely shareholder approval, no material changes to either company, and court and regulator permission.
Dexus will pay for the shares using its existing cash reserves. Given there are roughly 329.6 million shares outstanding in APN, the total cost of the transaction will be approximately $302 million.
Any break in the deal will incur a $3 million fee from one side to the other.
Management commentary
APN chair Chris Alyward said:
Dexus' all cash proposal represents compelling value to APN securityholders including a material premium to APN's trading price. We believe the combination of the two businesses will provide incremental growth opportunities for the APN business as well as its underlying funds, investors and our team members. The APD Directors consider this to be a very attractive offer and unanimously recommend that securityholders vote in favour of the schemes, subject to no superior proposal being made and the independent expert concluding the schemes are in the best interests of APN securityholders.
In a separate statement explaining Dexus' rationale to its shareholders, Dexus CEO Darren Steinberg said:
This transaction supports our strategic initiative of expanding and diversifying our funds management business, increasing our suite of funds on offer outside of wholesale funds into listed REITs, real estate securities funds and unlisted direct property funds. The transaction also expands our investor network to include retail and high net worth capital.
We believe APN is a high-quality real estate funds management business that complements our existing platform, and we look forward to APN's executives joining and strengthening the Dexus team while continuing to deliver strong results for investors.
Dexus and APN share price snapshots
Before today's announcement, the APN share price had appreciated 27.1% over the past year. After today, it's now 87.5% higher than this time last year. The Dexus share price is 11% higher when compared to 12 months ago.
In the first two months of 2020, just before the COVID-induced market crash, Dexus shares were trading as high as $13.42. It has a market capitalisation of $11.1 billion.
