Centuria (ASX: CNI) is making a takeover play, it’s looking to acquire the rest of Augusta Capital (NZE: AUG) for NZ$130 million.
What is Centuria?
Centuria is a specialist investment manager with a 35 year track-record of delivering a range of products and services to investors, advisers and securityholders. The business is centred around property funds management and investment bonds.
What is it acquiring?
Augusta manages a range of listed and unlisted funds for retail, wholesale and institutional investors. The funds invest in office, retail, industrial, tourism and infrastructure related real estate across New Zealand and Australia.
Centuria already owns 23.3% of Augusta and now wants to buy the rest. The original stake was bought in May this year in a capital raising at a price of NZ$0.55 per share.
Centuria specialises in office and industrial property – 72% of Augusta’s assets under management (AUM) is invested in these sectors. The acquisition will also diversify its funds management revenue with exposure to the New Zealand office and industrial sectors.
The takeover offer for the rest of the shares is for NZ$130 million. Each Augusta share will receive NZ$0.20 per share and 0.392 of a Centuria share.
This deal seems likely to go through because it’s supported by Augusta’s founding shareholders and other Augusta shareholders who, together with Centuria’s shareholder, represent 42.2% of Augusta’s total shares on issue. It’s also likely to go through because the implied offer price of NZ$1 per share is a 46% premium to the last closing price.
Summary
The NZ$1 offer is a decent price considering the company was trading in the NZ$1.30s in the last quarter of 2019. However, it remains to be seen how quickly commercial property income and values bounce back. Time will tell. I can see why Centuria is doing this for scale and diversification reasons. Though Goodman (ASX: GMG) could be the best industrial property business on the ASX.
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
