Centuria makes $130m takeover bid for NZ's Augusta Capital

Today, Centuria Capital Group (ASX:CNI or Centuria) reignited its bid for the NZX-listed Augusta Capital Limited by lodging a takeover notice, which could see Centuria grow its assets under management by 24% to AU$8.9 billion.

The proposed offer is worth NZ$130million. It would give Augusta shareholders NZ$0.20 in cash and 0.39 Centuria Stapled Securities in exchange for each of their Augusta shares.

The Implied Offer Price of NZ$1.00 per security represents a 46.0% premium to the closing price of Augusta shares on Friday 12 June 2020 of NZ$0.69.

Centuria’s initial bid in January was for $2.00 per share. However, this bid was withdrawn due to global uncertainty regarding the COVID-19 pandemic. In May, Augusta undertook a significant equity raising, nearly doubling the amount of stock on issue, and this factor is critical in assessing the consideration per Augusta share. This led to Centuria securing a 23.3% shareholding in Augusta at NZ$0.55 per share.

Joint CEO’s, John McBain and Jason Huljich, said, “Both Augusta Capital and Centuria are extremely compatible groups, which makes an acquisition of the remaining interest in Augusta consistent with our growth strategy. It has been a long-term, strategic journey to enter the New Zealand commercial real estate market and it’s taken Centuria about 10 years to finally find the right entity.

“Augusta is a well-run, professional and aggressively growing business. Recently, it took decisive action to minimise the impact of COVID-19 by raising equity thereby significantly reducing corporate debt and raising surplus cash to aid growth in the core businesses.

“Now, there is an opportunity to fully come together and optimise operations throughout New Zealand. With our capital backing and the Augusta team’s expertise, we’ll be well-placed to take advantage of opportunities as COVID-19 unwinds.”

The proposed takeover bid is supported by Augusta’s founding shareholders, Managing Director Mark Francis and fellow founder Bryce Barnett. Together with Centuria’s shareholding, Francis, Barnett and other Augusta shareholders represent 42.2% of Augusta’s total shares on issue which is impressive pre-bid support in this type of situation.

The takeover is subject to Augusta shareholders accepting the offer for at least 90% of Augusta’s shares and importantly, has been pre-approved by the NZ Overseas Investment Office.

Since New Zealand’s commercial real estate market is comparable Australia’s, the formation of a combined group would establish a market-leading trans-Tasman platform.

Approximately 72% of Augusta’s assets under management are within office and industrial markets, complementing Centuria’s portfolios. 95% of the combined portfolios would be in the office, industrial and healthcare asset sectors.

Centuria has two listed entities, namely Centuria Industrial REIT (ASX:CIP), which has 49 high-quality industrial assets under management, worth $1.6 billion; and Centuria Office REIT (ASX:COF), which has 23 office assets under management, worth $2.1 billion. Additionally, Centuria manages 13 unlisted commercial office and diversified funds along with nine unlisted healthcare property funds.

Centuria’s funds management revenues would be further diversified through an exposure to the New Zealand office and industrial sectors, reinforcing its position as one of the leading funds management platforms in the Australasian region.

If the takeover offer is accepted, Centuria’s market capitalisation will increase to over AU$1.0 billion, enhancing its potential for ASX 200 inclusion. On Monday 22 June, CIP will enter the S&P/ASX200.

The transaction would be funded by Centuria scrip and cash reserves.