Property company Mirvac Group is raising $500 million at the same time as it revealed it had entered into due diligence on Westpac Office Trust.
Announcements from both companies revealed the fund raising and the due diligence.
Mirvac’s announcement and an associated trading halt in Mirvac securities came shortly after Westpac Funds Management Ltd (WFML) said it had granted Mirvac an exclusive due diligence process on the potential sale of Westpac Office Trust (WOT), currently capitalised at $369 million.
The trust’s securities rose 4.5c, or nearly 6%, to 81c in early trading yesterday. The trust has net tangible assets of 83c a security.
The discussions between Mirvac, WFML and Westpac over the proposed acquisition are non-binding, confidential and incomplete, both companies said in respective statements to the Australian Securities Exchange (a bit like the "non-binding" $14 a share offer from Peabody for Macarthur Coal).
Westpac Funds Management said its independent directors had granted the exclusivity period "following discussions with a number of interested parties”.
WFML is the responsible entity of the Westpac Office Trust and there have been reports now for the past few months that the Trust could be sold.
Back in February Westpac Office Trust said in a statement:
"Westpac Funds Management Limited (“WFML”) is aware of media speculation concerning a possible transaction involving WFML and Westpac Office Trust (“WOT”).
"Westpac Banking Corporation (“Westpac”) is undertaking a strategic review of WFML and WFML’s property funds management business. This review includes investigating potential value-enhancing opportunities proposed by third parties.
"WFML remains receptive to all opportunities to create unitholder wealth, including opportunities that may arise as a result of Westpac’s strategic review.
"However, WFML understands that Westpac’s investigations are at an early stage, and emphasises that there is no certainty that those investigations will lead to a proposal which the directors of WFML will recommend to investors."
Mirvac’s institutional placement will seek $350 million in new capital at $1.40 per stapled security.
The securities last traded at $1.48, but have fallen from around $1.75 back in last September.
The offer price represents a discount of just 5.4% to Mirvac’s closing price on Tuesday.
A non-underwritten security purchase plan will seek to raise another $150 million from small security holders.
The possible move on WOT by Mirvac follows GPT’s $333 million deal with Grocon for a 50% stake in a new office building to be built in Sydney.
