Frasers Property (formerly: Frasers Cpt (FCL))

[greengiraffe]

Mr Market is a fair player. Understandably, there are people who are preying on the deal. As a vested interests, I can only see this deal as half full.

FCL has never been listed to return cash. If that was the original intention, it would not have been listed. I think the latest deal is totally unexpected and not according to my "drama serial" script.

Based on the serial so far, FCL is well run and has very little exposure in the markets that are facing turbulence. To make it even better, they have locked in whatever they can and even have platforms for them to enhance the efficiency of capital deployed.

That bags the other question of where to recycle capital - we got the first glimpse of what is being intended. Its obvious that the market is not happy with the price that was paid and came so shortly after Capitaland sold its strategic stake - a big question mark.

However, we have to bear in mind that FCL was only listed on 9 Jan 14 and most of the placement was done when FCL was very raw during the infancy stage of listing.

Personally, I think both Standard Chartered and DB has been appointed to advise FCL on the details of the takeover and financing to see through the whole deal. We must never forget that Charoen has his internal investment banker son-in-law, Chotipat Bijananda, adviser to the TCC Group.

Anyway, the most comforting thing is that Towkay still owns 88% of FCL, if he does anything foolish, his wealth will be affected. I am only a small fry so for me to be able to invest my $ with such a big swinging Towkay, it is a small honour. Mind you, cutting a mega deal Down Under is more transparent and regulated than a deal in the Middle Kingdom.

I think given the focus of ALZ that emphasis on Residential balanced with stable and strong recurrent income, there is definitely synergies to be extracted over time. If Stockland is keen, then FCL will also have their own reason for the bid.

Short term turbulence on the market is expected but doing the real business and extracting the synergies will take time. Real business is never easy and moreover to cut a sizable deal at a slight premium to book is equally hard to come by as well.

Vested
GG

[safetyfirst]

Never mind the deal, if FCL would drop below 1.70, i think it is time to buy some, if it drops below 1.50, then i will buy more. From a business perspective, I just hope that stockland will outbid FCL and hopefully FCL would give up

[jianjian]

Never mind the deal, if FCL would drop below 1.70, i think it is time to buy some, if it drops below 1.50, then i will buy more. From a business perspective, I just hope that stockland will outbid FCL and hopefully FCL would give up

Hope it doesnt end up in a bidding war..

[greengiraffe]

If you look at how Towkay play showhand and all cash offer - likely to be final deal. I don't expect Stockland to match a full cash offer.

Next up, how FCL will go out and convince market what they are looking at. However, based on prelim announcement by FCL, the synergies are there for preview.

They are experienced in Australia and they know that have a consistent pipeline of residential project Down under is difficult. Refer back to Lim Ee Seng's interview with Edge and you will understand that they have good feel of the markets that they are operating in.

If anyone thinks that this move is for fun and ego, overtime when Towkay peels the onion and reveals the potential, then the flies will come back and says that they have missed another strategic move of times.

Vested
GG

Never mind the deal, if FCL would drop below 1.70, i think it is time to buy some, if it drops below 1.50, then i will buy more. From a business perspective, I just hope that stockland will outbid FCL and hopefully FCL would give up

Hope it doesnt end up in a bidding war..

[greengiraffe]

http://www.dexus.com/upload/CPA/DEXUSOff...tement.pdf

The Dexus takeover of Commonwealth Office Property Fund (a pure office REIT previously listed on ASX is a good indications of the current value of ALZ.

The Dexus bid was eventually wrapped up at 1.106x P/B. However, one has to note that the Australia office sector outlook is probably the lowest ranked relative to industrial property and the residential sectors.

As Stockland has progressively up their bids till they final gain access to ALZ due diligence process at A$4.35 speaks so much about the tedious process in M&A Down Under. Consider that FCL decided to pay a 5.9% premium over Stockland for a relatively clean platform with good track record is probably a small amount to pay for the "Show Hand" deal.

"Showing Hand" after Stockland gone through the entire tedious process of engaging ALZ is probably a good alternative rather than engaging Stockland right from the start.

The main after taste to the proposed deal is likely to be on the hind sight - Capitaland sold their long time ALZ stake less than 9 months ago - starting at a discount and finally at a slight premium. Australand has been a 60% subsidiary of Capland since 1998 and for it to sell it off for a song considering the current boiling state of the residential market in the eastern seaboard of Australia is more puzzling.

Hence on a more balance basis, the price that Capland parted was more of a undervaluation while FCL and Stockland eventually paid a fairer price for ALZ at 1.252x and 1.182x P/B respectively.

Anyway, like I always say - Towkay will not shot himself in his own foot with him controlling 88% of F&N and FCL. Any slippage in the high chips game will leave him with little room for errors. Strategically, there is also a lack of sizable acquisition targets with proven track records in a well regulated and transparent operating environment outside Singapore currently.

Time will be a good witness of the hard work in real business.

Vested
GG

[swakoo]

The main after taste to the proposed deal is likely to be on the hind sight - Capitaland sold their long time ALZ stake less than 9 months ago - starting at a discount and finally at a slight premium. Australand has been a 60% subsidiary of Capland since 1998 and for it to sell it off for a song considering the current boiling state of the residential market in the eastern seaboard of Australia is more puzzling.

Capland raised around S$1.47 bil from ALZ.

To privatise CapMalls Asia, it needs about S$2.26 bil, more if it manages to force compulsory acquisition.

Maybe they were in a hurry to swop ALZ for a privatised CMA without incurring too much debt?

[greengiraffe]

The main after taste to the proposed deal is likely to be on the hind sight - Capitaland sold their long time ALZ stake less than 9 months ago - starting at a discount and finally at a slight premium. Australand has been a 60% subsidiary of Capland since 1998 and for it to sell it off for a song considering the current boiling state of the residential market in the eastern seaboard of Australia is more puzzling.

Capland raised around S$1.47 bil from ALZ.

To privatise CapMalls Asia, it needs about S$2.26 bil, more if it manages to force compulsory acquisition.

Maybe they were in a hurry to swop ALZ for a privatised CMA without incurring too much debt?

I think Capland has been telling mkt that they are so liquid that they need to look at where to use their excess cash. Anyway, since they started selling, they have been wrong and today's deal simply cast their track record with ALZ in stone.

Ah Gong $ can't be compared with family office hard earned $.

[greengiraffe]

Frasers’ $2.6bn Australand bid shakes Stockland
BRIDGET CARTER THE AUSTRALIAN JUNE 05, 2014 12:00AM

AUSTRALIA’S largest developer, Stockland, has been thrown off-guard with a surprise $2.6 billion rival cash bid for its takeover target Australand, launched by a Singapore-listed company that is controlled by Thailand’s third-richest man.

Frasers Centrepoint’s conditional cash bid announced yesterday sent Australand’s shares soaring by 5.57 per cent to $4.55, setting the stage for a dramatic bidding contest for some of the nation’s most valuable residential developments as the housing market begins to turn the corner.

But in a surprise twist, Stockland’s shares also rallied 1.8 per cent to $4.01 yesterday, valuing its scrip bid at $4.51 per share, more than Frasers’ $4.48-per-share cash offer, and leaving the market guessing if the business would end up in local or foreign hands.

The motivation by the Singaporean developer, which is 88 per cent-owned by the TCC Group, is to diversify away from the Chin­ese and Singaporean market.

It is also said to be attracted to Australand’s experienced management team, led by Bob Johnston; a lucrative pipeline of apartment and housing developments; and opportunity to secure a stronger foothold in Australia.

“We already have an established platform and good brand recognition in Australia, but real estate is a business where scale and depth matters,” chief executive Lim Ee Seng said.

Stockland’s board and its advisers moved swiftly yesterday to regroup on the news, which will derail its plans to conduct due diligence. It issued a statement to the market that it would provide an update in due course.

On May 28, the diversified developer lifted its takeover offer for Australand to 1.124 Stockland shares for every Australand share, then valuing its target at about $2.5bn, but the offer is now valued at more than $2.6bn.

Australand said the reciprocal due diligence provided was no longer available to Stockland and Frasers would now have an exclu­sive due diligence and negotiating period of four weeks.

Chairman Paul Isherwood said the board believed the proposal was superior to Stockland’s offer, which was final, subject to a rival approach. “Accordingly, the board has determined to progress the proposal with Frasers to determine whether an offer that is capable of acceptance can be presented to Australand securityholders,” Mr Isherwood said.

Frasers’ latest offer is a 19 per cent premium to Australand’s three-month volume weighted average share price up to March 18, the day before Stockland announced it had purchased a 19.9 per cent stake in Australand.

Including the half-year dividend, Frasers will pay out $4.61 per share. Shareholders will also be paid any second-half distrib­ution accrued when the offer becomes unconditional, which could be up to 12.75c a share. The deal is conditional on securing 50 per cent of shares and Foreign Investment Review Board approval.

Other residential developers, such as Mirvac, traded higher yesterday as the takeover news reinforced positive sentiment.

The reaction is a far cry from 18 months ago, when potential suitors shunned Australand’s residential business when the sector was out of favour.

Potential buyers then entered Australand’s dataroom after the GPT Group bid for its office and industrial properties.

Negotiations intensified in the past week with Frasers Centrepoint, the owner of $S10.5bn ($9bn) worth of property and backed by Thai billionaire Charoen Sirivadhanabhakdi. Analysts said the Frasers bid was superior, and had secured the backing of Australand shareholders.

JPMorgan analyst Richard Jones said he believed Stockland’s shares rose in the hope the group would crystallise profits through a sale of its 19.9 per cent Australand stake.

“The market has been worried that it may overpay, and I think today the market is saying it has a better-than-even chance of walking away,” Mr Jones said. “A cash offer gives investors certainty.”

Stockland in line for second prize of cash
STEPHEN BARTHOLOMEUSZ BUSINESS SPECTATOR JUNE 05, 2014 12:00AM

UNTIL yesterday, Stockland chief executive Mark Steinert would have been increasingly confident of the prospects for the success of his $2.5 billion bid for Australand. With his revised and final bid now trumped by Singapore’s Frasers Centrepoint, he may have to contemplate accepting a consolation prize.

Steinert raised his mainly scrip offer a week ago and won access to due diligence from an Australand board that had been dismissive of Stockland’s merger proposal. That offer of 1.124 Stockland shares (with the potential of a $250m cash component) valued Australand at about $4.35 per security.

Yesterday, Frasers emerged with a $4.48 per security all-cash offer that values Australand at about $2.6bn, or a 21 per cent premium to the group’s foreshadowed net tangible asset backing of $3.68 per security.

Quite apart from the fact that Stockland had declared its offer final, there were already murmurings of discontent among its own security holders about the premium over net assets Stockland itself was prepared to pay to merge.

Even with the upwards revision of Australand’s asset backing, a bid that topped Frasers’ (and which contained a sufficient premium over it to offset its all-cash nature) would be difficult to justify.

The game isn’t over for Stockland. The Frasers offer is an “indicative non-binding proposal” at this stage. It is conditional on exclusive due diligence, has a minimum acceptance condition of 50.1 per cent and need FIRB approval.

It is conceivable (albeit improbable) that after taking a good hard look at Australand from the inside, the Singaporeans might decide not to proceed. If they do go ahead with the offer, however, Steinert would have the option of taking a tidy second prize.

Stockland took a risk earlier this year when it grabbed a 19.9 per cent stake in Australand ahead of its offer. That $435m plunge on to the register was designed to deter any potential rivals for Australand as well as get the Australand board’s serious attention.

Evidently it hasn’t deterred Frasers Centrepoint, but the all-cash nature of the offer it has outlined would create an easy exit for Stockland and a profitable one.

Stephen Bartholomeusz is a columnist for Business Spectator. Visit businessspectator.com.au

[greengiraffe]

http://www.businesstimes.com.sg/premium/...l-20140605

PUBLISHED JUNE 05, 2014
HOCK LOCK SIEW
CapitaLand's loss could be FCL's gain in Australand deal
BYKALPANA RASHIWALA
kalpana@sph.com.sg @KalpanaBT

WHAT does Frasers Centrepoint Limited (FCL) see in Australand Property Group that escaped CapitaLand?
This must be a question on some market watchers' minds after FCL said yesterday that it had submitted a conditional cash proposal to acquire up to a 100 per cent stake in Australand at A$4.48 per stapled security, totalling A$2.6 billion (S$3 billion). FCL has entered into a four-week, exclusive due-diligence period, after which the plan is to launch a binding offer. A key condition is that FCL receives minimum 50.1 per cent acceptance.
CapitaLand had a 59.1 per cent stake in Australand, which it divested itself of in two stages: 20 per cent last November at A$3.685 a stapled security or a total of A$426 million, followed by a sale of the balance 39.12 per cent stake at A$3.75 each raising A$848.8 million. "This divestment would allow us to reallocate capital to our core businesses in Singapore and China," CapitaLand's group CEO Lim Ming Yan said in March.
The total sales proceeds of around S$1.5 billion would no doubt come in handy for the already cash-rich group in its effort to privatise CapitaMalls Asia.

[Art or Science]

Thanks GG for the article. You have been my news update on FCL matters
I managed to pick up the stock at 1.42.

I also wonder if it's time to sell.

Even if Towkay, who has 88% of FCL, wouldn't want to do a bad deal, 25% premium over their book value seems to be a tad high.

Have to research more to find out though.. Didn't expect this roller coaster ride though. Thought it will be just FCL off loading assets into Reits, etc.

Nevertheless. Interesting to a novice investor like me

Frasers’ $2.6bn Australand bid shakes Stockland
BRIDGET CARTER THE AUSTRALIAN JUNE 05, 2014 12:00AM

AUSTRALIA’S largest developer, Stockland, has been thrown off-guard with a surprise $2.6 billion rival cash bid for its takeover target Australand, launched by a Singapore-listed company that is controlled by Thailand’s third-richest man.

Frasers Centrepoint’s conditional cash bid announced yesterday sent Australand’s shares soaring by 5.57 per cent to $4.55, setting the stage for a dramatic bidding contest for some of the nation’s most valuable residential developments as the housing market begins to turn the corner.

But in a surprise twist, Stockland’s shares also rallied 1.8 per cent to $4.01 yesterday, valuing its scrip bid at $4.51 per share, more than Frasers’ $4.48-per-share cash offer, and leaving the market guessing if the business would end up in local or foreign hands.

The motivation by the Singaporean developer, which is 88 per cent-owned by the TCC Group, is to diversify away from the Chin­ese and Singaporean market.

It is also said to be attracted to Australand’s experienced management team, led by Bob Johnston; a lucrative pipeline of apartment and housing developments; and opportunity to secure a stronger foothold in Australia.

“We already have an established platform and good brand recognition in Australia, but real estate is a business where scale and depth matters,” chief executive Lim Ee Seng said.

Stockland’s board and its advisers moved swiftly yesterday to regroup on the news, which will derail its plans to conduct due diligence. It issued a statement to the market that it would provide an update in due course.

On May 28, the diversified developer lifted its takeover offer for Australand to 1.124 Stockland shares for every Australand share, then valuing its target at about $2.5bn, but the offer is now valued at more than $2.6bn.

Australand said the reciprocal due diligence provided was no longer available to Stockland and Frasers would now have an exclu­sive due diligence and negotiating period of four weeks.

Chairman Paul Isherwood said the board believed the proposal was superior to Stockland’s offer, which was final, subject to a rival approach. “Accordingly, the board has determined to progress the proposal with Frasers to determine whether an offer that is capable of acceptance can be presented to Australand securityholders,” Mr Isherwood said.

Frasers’ latest offer is a 19 per cent premium to Australand’s three-month volume weighted average share price up to March 18, the day before Stockland announced it had purchased a 19.9 per cent stake in Australand.

Including the half-year dividend, Frasers will pay out $4.61 per share. Shareholders will also be paid any second-half distrib­ution accrued when the offer becomes unconditional, which could be up to 12.75c a share. The deal is conditional on securing 50 per cent of shares and Foreign Investment Review Board approval.

Other residential developers, such as Mirvac, traded higher yesterday as the takeover news reinforced positive sentiment.

The reaction is a far cry from 18 months ago, when potential suitors shunned Australand’s residential business when the sector was out of favour.

Potential buyers then entered Australand’s dataroom after the GPT Group bid for its office and industrial properties.

Negotiations intensified in the past week with Frasers Centrepoint, the owner of $S10.5bn ($9bn) worth of property and backed by Thai billionaire Charoen Sirivadhanabhakdi. Analysts said the Frasers bid was superior, and had secured the backing of Australand shareholders.

JPMorgan analyst Richard Jones said he believed Stockland’s shares rose in the hope the group would crystallise profits through a sale of its 19.9 per cent Australand stake.

“The market has been worried that it may overpay, and I think today the market is saying it has a better-than-even chance of walking away,” Mr Jones said. “A cash offer gives investors certainty.”

Stockland in line for second prize of cash
STEPHEN BARTHOLOMEUSZ BUSINESS SPECTATOR JUNE 05, 2014 12:00AM

UNTIL yesterday, Stockland chief executive Mark Steinert would have been increasingly confident of the prospects for the success of his $2.5 billion bid for Australand. With his revised and final bid now trumped by Singapore’s Frasers Centrepoint, he may have to contemplate accepting a consolation prize.

Steinert raised his mainly scrip offer a week ago and won access to due diligence from an Australand board that had been dismissive of Stockland’s merger proposal. That offer of 1.124 Stockland shares (with the potential of a $250m cash component) valued Australand at about $4.35 per security.

Yesterday, Frasers emerged with a $4.48 per security all-cash offer that values Australand at about $2.6bn, or a 21 per cent premium to the group’s foreshadowed net tangible asset backing of $3.68 per security.

Quite apart from the fact that Stockland had declared its offer final, there were already murmurings of discontent among its own security holders about the premium over net assets Stockland itself was prepared to pay to merge.

Even with the upwards revision of Australand’s asset backing, a bid that topped Frasers’ (and which contained a sufficient premium over it to offset its all-cash nature) would be difficult to justify.

The game isn’t over for Stockland. The Frasers offer is an “indicative non-binding proposal” at this stage. It is conditional on exclusive due diligence, has a minimum acceptance condition of 50.1 per cent and need FIRB approval.

It is conceivable (albeit improbable) that after taking a good hard look at Australand from the inside, the Singaporeans might decide not to proceed. If they do go ahead with the offer, however, Steinert would have the option of taking a tidy second prize.

Stockland took a risk earlier this year when it grabbed a 19.9 per cent stake in Australand ahead of its offer. That $435m plunge on to the register was designed to deter any potential rivals for Australand as well as get the Australand board’s serious attention.

Evidently it hasn’t deterred Frasers Centrepoint, but the all-cash nature of the offer it has outlined would create an easy exit for Stockland and a profitable one.

Stephen Bartholomeusz is a columnist for Business Spectator. Visit businessspectator.com.au