The Abacus Storage King (ASX: ASK) share price is under the spotlight after receiving a large takeover offer.
The business owns a portfolio of around 150 assets spread across Australia and New Zealand. Its portfolio is worth around $3 billion and offers self-storage space of around 660,000sqm.
Takeover offer for Abacus Storage King shares
Abacus Storage King has received a conditional and non-binding offer from Ki Corporation and Public Storage (NYSE: PSA) to buy all the shares they don’t already own.
ASX investors would receive A$1.47 per share, minus any dividends or distributions declared after the date of the offer.
It’s expected that Public Storage would own approximately 50% of the ASX share, with the balance held by Ki.
The offer includes conditions such as due diligence, regulatory approval, a private ruling by the ATO, unanimous recommendation by the board of directors, no ‘material adverse change’ to Abacus Storage King and no other certain events that occur.
The bidders have also advised that as part of the offer, they would seek to transfer all management arrangements currently done by Abacus Group to Abacus Storage King.
Initial response
The business said that it has formed an independent board committee consisting of Abacus Storage King’s independent directors and it has started an assessment of the proposal, but at this stage “has not formed any view on its merits”.
My view on the takeover
I can see why the bidders have launched a takeover – share prices have dropped in recent weeks and there are predictions that interest rates could be cut to try to support the local and global economy, which would be useful for property businesses like Abacus Storage King because it’d reduce the cost of debt and likely increase the underlying value of the properties.
When the offer was announced, the offer price was 26.7% above the last traded price, which isn’t a huge premium considering what’s going on and what could happen next.
If I were a shareholder, I’d hope for engagement and a higher offer after due diligence. The offer was lower than the net tangible assets (NTA) of $1.60 per security at the HY25 result.
We’ll see what happens next.
