Irongate (ASX:IAP) share price rallies 17% on Charter Hall takeover proposal

Irongate shares are jumping today after another takeover approach from Charter Hall.

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Key points

  • The Irongate share price has jumped today after another takeover offer
  • Charter Hall and PGGM are interested in buying the Irongate business
  • 360 Capital may end up buying some of Irongate’s assets

The Irongate Group (ASX: IAP) share price has stormed higher by 17% after receiving another takeover offer, this time from Charter Hall Group (ASX: CHC).

The last takeover approach by 360 Capital Group Ltd (ASX: TGP) was rejected.

Charter Hall’s bid for Irongate

In today’s announcement, it was revealed that Charter Hall’s managed partnership has lobbed a non-binding indicative proposal.

The bid is to buy all of the shares for an Irongate share price of $1.90 cash per stapled security. Under the terms of this bid, Irongate investors will be entitled to retain a distribution for the period ending 31 March 2022 of up to 4.67 cents per stapled security.

Charter Hall notes that this offer is a 21% premium to the Irongate last closing price of $1.57 per security on 28 January 2022.

The partnership between Charter Hall and the Dutch pension fund PGGM expects to fund this proposal from existing financial resources, including existing cash and new debt facilities. Charter Hall and PGGM have received approvals from their relevant board and investment committees to pursue the transaction.

Charter Hall said that it has spent considerable time and resources reviewing Irongate’s portfolio from public sources in order to be in a position to put forward this proposal. PGGM and Charter Hall are “highly motivated” and able to complete due diligence and proceed to a formal offer in an “expeditious” manner.

How does 360 Capital factor into this?

Today’s indicative proposal includes a memorandum of understanding with Irongate’s largest securityholder, 360 Capital.

The memorandum of understanding includes a call option over 360 Capital’s 19.9% securityholding of Irongate.

The memorandum also includes standstill and exclusivity provisions in favour of the partnership and describes a proposal where 360 Capital will acquire certain assets within Irongate’s portfolio, Irongate’s funds management business and its co-investment stake in the ITAP Fund if the partnership is successful at acquiring Irongate.

However, Charter Hall’s bid is not conditional on 360 Capital completing the acquisitions.

The first response

The Irongate board is considering this new indicative proposal with the assistance of its advisors, Macquarie, JP Morgan, King & Wood and Cliffe Dekker Hofmeyr.

However, it was noted that the indicative proposal has a number of conditions including completing satisfactory due diligence, final approval of the partnership’s boards and investment committees, regulatory approvals, unanimous recommendation by the Irongate board and so on.

Irongate share price snapshot

Over the last six months, Irongate shares are up around 25%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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