ING Property Trust has ditched its takeover plans for Calan Healthcare Properties Trust, preferring instead to negotiate for the management rights in a deal worth about $20 million.
The $219 million takeover was aborted after an unflattering report from Ferrier Hodgson out late last month, which calculated Calan's worth at
between $1.41 and $1.55 compared with ING's bid price of $1.25.
Ferrier said the deal was unfair due to the price, risk, ING's lack of expertise and for disadvantaging Calan investors by cutting them out of future development opportunities.
Calan units closed down 8c at $1.20 yesterday.
ING hopes to buy shares in Calan Healthcare Properties and the associated companies that manage the trust. Such a deal does not require unitholder approval nor any price disclosure. The management of other major listed property entities have been sold for around 8 per cent to 10 per cent of total property asset value.
The trust is an NZX-listed entity managed by Calan Healthcare Properties which is majority controlled by Nalac Investment Management, 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 who has since fronted all deals.
Around the time of the changeover, Lyttelton was under attack by Calan's unitholders, who gave him a year to put the then struggling trust to rights. Under Wentworth's reign, Calan has since sold many non-performing assets and finished a major Melbourne development.
In abandoning its takeover bid for the medical landlord, ING chief Andy Evans said the management deal was subject to documentation and the fulfilment of certain conditions.
Yesterday, ING increased its stake in Calan to 19.9 per cent to block any on-market takeover moves by rivals.
Lyttelton said the sale would be positive for the trust's future.
Calan's manager was paid a base fee of $1.6 million last year, up on $1.5 million in 2004.
The trust also paid the manager an incentive fee of $534,516, up from $53,325 in 2004.
That payment was made by the issue of units in the trust. A range of other payments were also paid to the manager and declared in Calan's annual report.
