The Australian Takeovers Panel has declined to block a A$236.8 million (€124.4 million; $158.4 million) proportional takeover of listed retirement village fund Babcock & Brown Communities by Lend Lease Corp.
However, the panel also requested that Lend Lease and Babcock delay the execution of the initial part of their agreement until Babcock shareholders vote on the plan on 17 November.
Prime Retirement Trust, which had launched a rival takeover offer for Babcock in September, had sought to block the deal when it requested that the panel make a declaration of unacceptable circumstances. Prime had argued that not requiring shareholder approval for all the terms of the plan constituted a “frustrating action” with regard to its competing bid, and asked that the proposals be submitted for such approval.
“The decision vindicates that Prime Trust's concerns over the proposed actions of these parties were appropriate to put to the panel,” Prime said in a statement.
Stage one of the proposal called for Babcock & Brown Communities’ manager, Babcock & Brown Ltd., to sell management rights and its 12.5 percent stake in the fund to Lend Lease in a transaction valued at €37.4 million. Of that total, €9 million would cover the contract and the remainder would cover its equity stake, payable in two tranches.
Babcock & Brown Communities’ board, which had earlier rejected Prime’s offer to acquire 40 percent of the fund and opted instead to accept the competing offer from Lend Lease, continued to urge shareholders to reject Prime's offer in response to the panel's ruling.
The offers were part of a price discovery process for the fund that followed a strategic review by Babcock & Brown Ltd. of the ownership and management of its satellite funds.