Perth-based property developer, Cedar Woods Properties says it has seen off an unwanted $310 million takeover offer because it undervalued the company.
Cedar Woods told the ASX in a statement that an unnamed third party had offered to acquire all the company’s shares for a total $5.05 per share.
Media reports this morning suggested that Mirvac was the unnamed third party.
The shares were trading at $4.49 on Monday, but yesterday they rose 30c or 6.7% to $4.79, which is just a cent under the 52 week high.
The third party withdrew its offer after the board of Cedar Woods decided the proposal was "insufficient".
"The Cedar Woods’ board has consistently stated that it believes the current (market) value of the company’s projects to be substantially above the value reflected in its share price," it said.
Cedar Woods, which is involved in urban land subdivisions in Western Australia and Victoria, said the takeover offer represented "only" a 10 per cent premium to the company’s 10-day volume weighted average share price of $4.57 at the close of the market yesterday.
"The board believes the company is well placed, assuming reasonable market conditions, to comfortably exceed its 10 per cent per annum earnings growth target in coming years and in particular in FY2012, given the strong pre-sales already recorded," the company said.
The company said the takeover proposal involved a cash offer of $4.05 coupled with a fully franked special dividend from Cedar Woods of $1.00 per Cedar Woods’ share.
"The Takeover Proposal was made on a confidential basis and was subject to a number of conditions, including due diligence and a majority Board recommendation.
"The Board felt it was in the interests of shareholders to engage confidentially with the third party, as is permissible under the Listing Rules, to see if a transaction that we were prepared to recommend could be developed.
"The Board actively sought to negotiate modifications to the terms of these conditions, but ultimately, a number remained incapable of being satisfied as formulated.
"The Board’s consideration of the Takeover Proposal involved detailed engagement and exchange of information under a due diligence process over an extended period.
"The Board took into account financial advice from Gresham Advisory Partners and legal advice from Cochrane Lishman Carson Luscombe."
Cedar said it had announced a record half year profit and expected a record full year after tax net profit "result for 2011 of approximately $27m (up 57% on 2010). The company also expects a strong first half for 2012, with $100m of presales already in place."
"The Board believes the company is well placed, assuming reasonable market conditions, to comfortably exceed its 10% pa earnings growth target in coming years and in particular in FY2012, given the strong pre-sales already recorded," Cedar directors said in the statement.
