Centuria Capital (ASX:CNI) share price rises as merger edges closer

The Centuria Capital Group (ASX: CNI) share price was on the rise today as the company’s takeover of Primewest comes closer to fruition.

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Man drawing illustration of a big fish eating a little fish representing a takeover or acquisition.

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The Centuria Capital Group (ASX: CNI) share price was rising today. The company came into focus after its takeover of Primewest Group Ltd (ASX: PWG) came one step closer to fruition.

By the market’s close, shares in the real estate funds manager were trading at $2.71 each – up 1.5%. Similarly, Primewest shares were up 2.07% to $1.48. For comparison, the S&P/ASX 200 Index (ASX: XJO) closed the day 0.57% higher.

Let’s take a closer look at today’s news.

Background

Back in April, Centuria first submitted an offer to buy its fellow real estate fund manager for an implied price of $1.51. The offer consisted of 20 cents in cash and 0.473 in Centuria securities for every share in Primewest. At the time, the proposed offer of Centuria shares was worth $1.31. At today’s valuation, it is now worth approximately $1.29 – for a total price of $1.49 now. This is still one cent above the current Primewest share price.

The deal was practically done from the moment it was announced. Primewest directors said they planned to vote unanimously in favour of the deal and, since they own 53% of all shares in the company, had a majority vote.

Latest takeover news

 In its statement to the ASX, Primewest says it is recommending shareholders accept the deal for 100% of its shares. The company gave the following reasons as to why:

  • An “attractive premium” of 3.1% based on the closing price of Primewest and Centuria on 16 April, and an 11.8% premium based on an average 30-day price of the two companies.
  • A 60.9% shareholder return for Primewest owners.
  • A 19% appreciation in earnings per share in the merged company compared to Primewest alone.
  • Greater diversification of assets and greater relevance in its assets under management.
  • A stronger likelihood of being placed in the S&P/ASX 200 Index (ASX: XJO). The new company will have an estimated market capitalisation of $2.2 billion.

In its own statement, Centuria gave similar reasons to Primewest shareholders as to why they should accept the offer.

Today’s statement takes Centuria one step closer to acquiring Primewest. 

Centuria Capital share price snapshot

Over the past 12 months, the Centuria share price has increased by 85.9%. Its value crashed to around $1.40 at the height of the COVID market crash before recovering to levels seen just before the pandemic.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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