Cromwell Property Group's biggest investor, Singapore's ARA Asset Management, has moved again to lift its stake in the company through on-market purchases in the Brisbane-based property group.
The Singaporean investment house announced on Friday it had increased its offer for shares by 4.4 per cent which would see its security holding increase to 26.69 per cent.
Cromwell, which holds significant offshore interests—with more than $6 billion in funds under management in Europe—currently is one of Australia’s largest funds with direct international property market exposure.
“The ARA Group intends to declare the Offer Price final at $0.92 per Cromwell security and, in the absence of a competing proposal emerging, will not increase it further,” ARA said in a statement to the ASX.
“As Cromwell’s largest security holder [our] interests are aligned with all Cromwell security holders and it is focused on ensuring sustainable value generation for all Cromwell security holders over the long term.”
If the Singapore-listed property manager bought any shares on market at 92¢ it would also have to increase its proportional takeover offer—which it tabled in late June—to the same price.
Cromwell, which is led by Paul Weightman and chaired by Leon Blitz, described the move as an “unsolicited opportunistic attempt to gain control of Cromwell at the lowest possible price”.
“Security holders do not need to accept ARA's offer and sell any of the securities at the lowest possible price,” Weightman said.
Weightman also noted that ARA’s offer was designed to exploit the current volatility in markets due to Covid-19.
ARA originally offered $0.90 per share, but that was lowered to $0.88 due to Cromwell's midyear distribution announcement.
Now the bid has been lifted by $22.2 million to $528.7 million overall, using what is known as the “creep exemption” to take holdings to around 48 per cent—enough to tip voting decisions in its favour.
ARA, which currently holds a 24.1 per cent stake in Cromwell, has long expressed dissatisfaction with Cromwell's strategy including its move to bring on to its balance sheet a portfolio of Polish shopping centres for close to $1 billion and has so far failed to gain a position on its board.
Tensions have risen between the two companies over the past year as it became apparent there were conflicts of interest between the pair.
The rift widened last year when ARA was shut out of a $375 million capital raising by Cromwell, diluting its stake, while both companies openly competed for the same assets in the market.
The Singaporean investor has twice failed in its efforts to get its nominated candidates, Gary Weiss, and businessman Joe Gersh voted onto the Cromwell board.
“This [offer] is consistent with ARA’s intention to refresh the board,” Weightman said.
“While securityholders may or may not be prepared to support the Board changes proposed by ARA, securityholders can simply exercise their voting rights.
“Security holders do not need to accept ARA's offer and sell any of the securities at the lowest possible price.”
Credit Suisse, Moelis and Arnold Bloch Leibler are advising the bidder.