Augusta Charting Out Plan Around Centuria Capital Takeover

Summary

• Centuria Capital’s second acquisition bid offers half the price to acquire shares in Augusta Capital.

• Centuria expects to provide ''a much larger, high quality and highly complementary Trans-Tasman real estate platform'' to the Augusta shareholders.

• Augusta to appoint an independent advisor to prepare a report on the proposed offer which will be shared with NZX and the stockholders.

According to a professional investor, many current shareholders in NZX-listed Augusta Capital (NZX:AUG) are planning to sell their shares.

Australian funds manager Centuria Capital (ASX:CNI) has now for the second time offered to acquire shares of Augusta Capital but the second offer is half the price of the first. This would take Centuria’s holding to 100% at an implied offer price of NZ$1 per share, comprising NZ$0.2 per Augusta share in cash and 0.392 shares of Centuria Capital.

On June 15, Augusta announced receiving full takeover notice from Centuria Capital Group. The Centuria Offer is scheduled to close on 19 August 2020 midnight which can be extended at Centuria’s discretion.

Centuria may exercise its right under the Takeover Code to acquire all the remaining shares in Augusta Capital, if 90% of Augusta shareholders decide to accept the offer.

Centuria terminated the Bid Implementation Agreement in March with the market taking plunge by Covid-19. In January, the offer was NZ$2 per share.

Through a recent equity raising for Augusta, a subsidiary of Centuria Capital, Centuria NZ bought a 23.3 per cent stake in Augusta Capital.

In New Zealand and Australia, Augusta Capital controls NZ$1.83 billion of commercial property.

ALSO READ: Centuria Capital Steps Forward on Takeover Offer for Kiwi Property Manager, Augusta Capital

While Centuria traded at A$1.650, down 1.8% on 20 July 2020 (12:18 PM AEST), Augusta traded at NZ$0.91, up 0.55%.

Takeover’s Perceived Benefits

Centuria expects to provide ''a much larger, high quality and highly complementary Trans-Tasman real estate platform'' to the Augusta shareholders.

Both Centuria’s joint chief executives are former New Zealanders and currently living in Australia. They said that the company supports Augusta's management team.

Via the amalgamation of existing management team through the sharing of systems, resources and deployment of additional capital, Centuria wishes to proliferate Augusta’s operations in New Zealand.

The merged entity will manage assets worth $8.9 billion. With the Covid impact on Augusta Capital and the impact of the lockdown in NZ on the tourism industry, Centuria feels the takeover will be successful this time around. A larger group is better in handling COVID-19 situation and the group will take advantage of the opportunities arising amid pandemic scenario.

Way Ahead

Augusta’s board met on 15th July to discuss the takeover notice with the intention to gather a board committee which oversees Augusta’s response. The Board committee is to appoint an independent adviser to gather reports on the merits of the offer.

Augusta also suggests its shareholders to not take any action at this point in relation to the proposed offer. The company will further guide its shareholders with independent advisor’s report.

Augusta will prepare a company statement, if the offer is made. It will be issued to the NZX and the company's shareholders, along with the independent adviser’s report which is required under the Takeovers Code.

This offer is supported by Augusta’s founding shareholders Managing Director Mark Francis and fellow founder Bryce Barnett, along with Other Augusta Shareholders who, together with Centuria’s 23.3% shareholding, represent 42.8% of Augusta’s total shares.

Mark Francis and Bryce Barnett hold 11.9% and 3.0% of the Augusta Shares, respectively. They have entered into lock-up agreements under which they have agreed to accept the Offer.

Centuria also suggests that Augusta Shareholders who receive Centuria Stapled Securities will take advantage from the increased scale, relevance and liquidity that comes from the combination of Centuria and Augusta, and Centuria being in the S&P/ASX 300 Index.

The offer also enhances the potential for inclusion of the Centuria Capital Group in the S&P/ASX 200 Index. Centuria also fears the risk of Augusta share price falling if the merger does not result in Centuria NZ obtaining sufficient acceptances to compulsorily acquire Augusta.