Equity firms eyeing Aussies for takeover
US investment group Morgan Stanley’s $ 6.6 billion takeover offer for property fund Investa could be just the first of many, with global private equity players having up to $ US300 billion ($ 356 billion) in their pockets to spend on Australian companies such as Lend Lease and Multiplex.
Merrill Lynch analysts say there could be $ US104 billion in the coffers of property private equity firms committed, but not yet spent, for Australian takeover or merger targets.
‘‘ Assuming a 65 per cent gearing, this can mean almost $ US300 billion buying power,’’ Merrill Lynch says.
Earlier this month Morgan Stanley launched a $ 4.7 billion cash bid for Investa. The friendly offer of $ 3.08 a security puts an all- up value ( including debt) of $ 6.6 billion on the Sydney property group — the biggest office tower landlord in the country.
It could also kick off another wave of takeovers as offshore and local groups run the ruler over competitors.
Colonial First State’s retail office trust, CFS Retail, was the most vulnerable to takeover or merger, according to Merrill Lynch.
Next on the list were the two big builder/ developers Multiplex and Lend Lease ( Multiplex is already the subject of a takeover offer from Canada’s Brookfield and the founding Roberts family).
Deutsche Bank’s RREEF trust, Mirvac, APN/ UKA European Retail Trust, and Commonwealth Office also rank highly as potential takeover targets. Merrill Lynch looked at what makes a company vulnerable, including balance sheet strength, management’s willingness to sell, value of individual assets and the strength of cash flows.
An acquisition of retail property giant Westfield Group is unlikely, the firm says.
‘‘ The Lowys ( the family who run and control the business) are well compensated, high- profile managers of one of the largest Australian companies and global real estate investment trusts,’’ Merrill Lynch says.
Another analyst, JP Morgan, picks the Macquarie Bank- managed Macquarie Office Fund as a potential target.
‘‘ We think Macquarie Office Fund will either buy out the share owned by the Blackstone Group in a number of joint venture assets or, with Blackstone, dispose of assets,’’ JP Morgan says.
‘‘ Buying core assets in quality US markets is now pretty well out of Macquarie Office Fund’s league.’’
But if Macquarie Office is a target, Macquarie Bank would respond to any suitor in ‘‘ full force’’, JP Morgan says. ‘‘ Despite that, a bid cannot be ruled out.’’ Macquarie Countrywide Trust, which has 251 property assets in four countries, is almost ‘‘ takeover proof’’ with its move into the US, which is also highly profitable for unitholders, JP Morgan says.