The planned sale of management rights for the Calan Healthcare Properties Trust to ING Property Trust Management has been greeted with dismay by sharemarket observers.
They are angry the sale was negotiated at the same time as the trust was defending itself from a $173 million takeover bid by ING
Property Trust, managed by ING Property Trust Management.
They argue the defence strengthened the hand of the owners of the Calan management company, Calan Healthcare Properties Management, in negotiations for the sale of the management rights. The defence boosted the value of the company and the value of the management contract, they said.
Meanwhile, ING Property Trust Management gets many of the benefits it would get from the merger of the two trusts without a full takeover.
Shareholders' Association research director Oliver Saint says the sale highlights the weakness of the trust structure.
"The trust structure should be dis-established," he said.
Another analyst said: "These structures are materially conflicted."
The owners and executives of Calan Healthcare Properties Management declined to comment. But they are likely to argue that they followed the Takeovers Code, obtaining an independent appraisal report, putting it in the market and making a recommendation not to sell into an offer, should one be made.
ING Property Trust ditched its takeover plans for Calan Healthcare Properties Trust on Thursday as its management company disclosed plans to buy Calan's management rights. It also increased its stake in Calan to 19.9 per cent to block any rivals.
ING's formal offer was never launched. The plans ran into trouble last month after an independent appraisal report by Ferrier Hodgson put Calan's worth at between $1.41 and $1.55. This compared with ING's proposed bid price of $1.25. Calan units closed down 1c at $1.19 yesterday.
Calan Healthcare Properties is controlled by Nalac Investment Management, which is in turn owned by the Calan Group, owned by trust founders Martin Lyttelton and Brian Freestone.
Lyttelton, the trust's former managing director, was replaced in June 2003 by Miles Wentworth.
He said on Thursday the sale would be positive for the trust's future.
