Stockland’s attempts to expand deeper into the retirement living sector by buying control of rival, Aevum, is now at the interesting stage.
The market reckons there could still be a counter offer from someone (the odd one from a partly-owned subsidiary of FKP seems to have died a natural death) offering more than the new price of $1.80 a share ($1.77 cash and 3c a share dividend if accepted by September 30) revealed on Monday by Stockland.
The market pushed Aevum shares up 4%, or 7c to $1.805 at the close on Tuesday and they closed unchanged yesterday after the company’s board issued a new letter to shareholders.
That letter contained another hint that the company is talking to other groups.
"While there can be no certainty of outcome, as previously advised, preliminary discussions are taking place with a number of other parties that may lead to a superior offer, the letter said.
"Aevum will continue to progress those discussions and keep shareholders informed on any material developments as appropriate.
"Aevum shareholders should note that by declaring its offer unconditional and final, Stockland is not able to walk away from its offer or increase its offer price.
"This means that you have the option to accept Stockland’s increased offer up until the close of its offer on 30 September 2010 (or any later date if the offer period is extended).
"If a superior offer for Aevum emerges before the close of Stockland’s offer, you will not be able to accept the superior offer if you have already accepted Stockland’s offer.
"You can rest assured that your Board is working hard to ensure that all options are properly considered and is mindful of the need to update shareholders sufficiently prior to the current scheduled close date of 30 September 2010," the letter added.
The small premium to the offer price of half a cent is a sign that a hedge fund or other punters are keeping the price a touch higher than the offer in the hope of a higher counterbid emerging.
It has already worked with the original $1.50 a share offer overbid and never seemed to weaken as the Aevum board and consistently rejected the Stockland offer.
The Aevum share price was sitting at $1.70 in late August, so the market had been confident for a while that Stockland would have to offer more, which they have now done. But no more.
Stockland said this week that Aevum shareholders who accept Stockland’s increased Offer before 30 September 2010 will now receive a cash payment of $1.80 per share, which will be made within three business days of receipt of their acceptance.
The total value of $1.80 per share comprises an increased Offer price of $1.77 per share, plus the value of Aevum’s three cent final dividend.
The offer will close at 7.00pm (Sydney time) on 30 September 2010, unless extended.
But now the game has changed with Stockland declaring its higher bid unconditional and final, and the repeated suggestion of other interest parties according to the Aevum board.
Final bid are just that, no more price rises are allowed.
The AMP did that in its stalking of AXA AP, and it backfired.
Now commentators are wondering if it could frustrate Stockland.
But the respective sizes of the two deals (AXA and AMP over $13 billion) and the Aevum bid at just over $300 million, means there’s not much at stake in reality for Stockland.
Stockland is unlikely to reach the 90% shareholding required for compulsory acquisition.
It has made it clear that it is prepared to sit and wait with a minority stake.
Doing that will keep the share price around the $1.80 mark as punters speculate on a mop up offer in six months or so time, or a deal with the Aevum board and a higher price to wrap it all up.
Aevum’s board and small shareholders now know that it’s a case of a bird in the hand versus and unknown one or two in bush, especially if the board can’t quickly get a believeable counter offer on the table.
