ASX-listed Centuria Capital has withdrawn plans for a $NZ180 million (A$174.8 million) takeover of one of New Zealand’s largest listed real estate funds management platforms Augusta Capital.
In a statement to the ASX, Centuria confirmed the deal, which had been a matter of consideration for a considerable amount of time, had been called off amid the coronavirus pandemic and ongoing market volatility.
Centuria had hoped to increase the company's exposure to NZ property in a global low-rate, low-yield environment, making a bid for Augusta in January.
Centuria tapped the market to help fund its acquisition through brokers Moelis and UBS, launching an $80m placement, with the remainder funded by cash and scrip with shares being offered at $NZ2 each.
The takeover was set to see Centuria’s funds under management grow by $1.9 billion to $9.2 billion.
It would have also exposed Centuria's revenues to Augusta's assets firmly based in large format retail market and New Zealand’s tourism sector.
However, the spreading coronavirus crisis has prompted a nationwide lockdown forcing property groups to re-think upcoming deals in such a highly unstable environment.
Augusta, a property management platform with heavy exposure to the Auckland commercial property market, valued the properties under management at $2 billion before the outbreak.
Led by Paul Duffy and Mark Francis, Augusta earlier this year entered into an agreement with Centuria, subject to obtaining certain regulatory approvals, to takeover 100 per cent of the company's shares.
In a statement to the NSX, Augusta said it had no further information regarding the termination at this time but would update shareholders in due course.
Augusta's shares dropped 8.3 per cent after the announcement and were trading at almost half the value of the offer price.
Centuria has remained open to a potential deal further down the road once market conditions had stabilisedjanua.
“Centuria has a long-term view regarding the attractiveness of the New Zealand property funds management sector and it may seek to enter this market as conditions stabilise,” Centuria Capital joint chief executive John McBain said.
Centuria noted it has $135 million if free cash with operating gearing of 0.4 per cent and $170 million worth of debt comprising two corporate bonds.
“We are well prepared to weather what we anticipate will be challenging global financial markets, but our track record has proven we are also capable of taking advantage of these conditions to the benefit of our investors.”
The company has since revised its guidance to 11.5 cents (previously 12.5 cents) per share of operating earnings for the 2020 financial year and reconfirmed its distribution guidance of 9.7 cents.