KEY POINTS:
The structure of listed property trusts has been questioned, following the failure of ING's attempt to take over Calan Healthcare.
ING Property Trust announced last week that it had abandoned its plan to buy out medical landlord Calan, of which it owns 19.9 per cent. The trust also
manages Calan. The takeover price was said to be the main factor behind the deal's collapse.
Paul Richardson, equities portfolio manager at BT Funds Management in Auckland, said he was concerned about the potential conflict of interest over the deal.
Richardson complained about a lack of information on the takeover, saying ING's offer price was never disclosed.
Nor was it clear exactly why the deal had been ditched, he said.
"What they wanted to do, what the price was and why they stopped it - these are the questions I have," he said. "In a general sense, the trust structure is not the best."
ING and Calan's statements on the deals referred to a scrip exchange ratio, but neither party would say what was being offered; nor was an independent appraiser's draft report made public to give investors information about the terms of the deal.
One institutional investor backed Richardson's comments. An executive said he had long held concerns about corporate governance of trusts.
"Issues at ING and the track records of directors and related party issues - in short, none of this comes as a surprise to us," the executive said.
But others praised ING for backing away from the Calan deal.
Jeremy Simpson, an analyst at Forsyth Barr, said ING had ended a "prolonged period of uncertainty" by ditching the Calan deal. He wrote a report last week praising ING for its latest property purchases and its decision to ditch the Calan deal.
"Given the high level of the Calan unit price over much of the last 12 months, we did not expect the merger to proceed," he wrote.
ING closed at $1.25 yesterday, while Calan closed at $1.32.
Jeremy Nicoll, company secretary to the managers of both trusts, said ING's announcement that it would buy back 10 per cent of its units on issue was another positive step. He favours ING continuing to issue an "accumulate" notice on the stock.
Bruce Davidson, Calan's chairman, defended the trust structure, saying Calan's independent directors had stood up to ING's manager and opposed the takeover because it was not in Calan unitholders' interests. This showed that the structure did work, he said. Davidson said he had no plans to change his role after opposing his employer on the deal.
