Calan Healthcare Properties' independent directors today advised shareholders not to sell into a takeover offer by ING Property Trust, describing the offer as "unfair".
In a toughly worded statement the directors unanimously recommended Calan unit holders snub ING's cash-and-scrip offer of $1.25 a unit.
The recommendation was based on an
independent appraisal report by valuers Ferrier Hodgson concluding the ING offer undervalued Calan by between 20c and 34c.
Ferrier Hodgson said that, once dividends were stripped out, the ING offer had a true value of $1.2 08 -- more than 4c lower than ING's stated offer value of $1.25.
ING's offer was well below Ferrier Hodgson's "fair value" range of $1.41 to $1.55, and 22 per cent below the mid point of $1.48.
ING has offered 63c in cash (reduced for Calan's 23c per unit dividend for the quarter ended December 31 ) plus 0.528 units in the ING Property Trust, for each Calan unit.
The independent directors cautioned that while Calan had a low risk, medium return profile, the market view on ING's risk profile could be different.
Calan's portfolio was dominated by the two "investment grade" properties of Epworth and Ascot with long lease terms and high credit quality major tenants, the directors said.
In contrast, the ING portfolio consisted of a large number of properties with a variety of uses and tenants and generally shorter lease terms.
Calan unit holders should also consider that if the ING offer was successful, ING would not have Calan's specialist skills and expertise in healthcare property management.
The Ferrier Hodgson report said without specialist health care property management skills, the value of any ING units issued to Calan unit holders risked being reduced.
ING currently owns just under 16 per cent of Calan , including the 10.3 per cent already owned by its managed funds arm, ING (NZ) Ltd.
The takeover is becoming increasingly acrimonious , with ING last week questioning Calan's decision to base a recent valuation on the gross asset value of the units, rather than the customary net tangible assets method.
That revaluation boosted the value of its units as at January 31 by 6c to $1.29 -- above ING's offer of $1.25c a unit. On a n NTA basis, the units were worth $1.25 per unit.
Last week, Calan said the commissioning of its flagship Melbourne hospital, Epworth Eastern, had increased rental income and helped it to lift its December half-year net profit 62 per cent to a record $5.3 million.
- NZPA
