In what is a rare moment in the marketplace, property analysts are actually agreeing with Grand Hotel Group’s management board that Mulpha Australia’s $220 million takeover bid is highly opportunistic.
Yesterday, an analyst told Australian Property Journal that Mulpha’s offer of 85 cents per security was highly ambitious.
“When Mulpha made the takeover offer of 85 cents, GHG was trading at around 83 and 84 cents.
“And today, GHG shares are trading between 94 and 95 cents,” the analyst said.
The analyst said shareholders are highly unlikely to accept Mulpha’s offer.
“Unless Mulpha revises its bid, there is no way a shareholder who has seen the NTA significantly over the past 12 months from $1.06 to $1.33 will sell. Having said that, the trust has had difficultly going forward and there has always been criticism of its management.
“GHG has been performing poorly in the past but it looks like the trust is in a good position in the marketplace at the moment with the hotel market undergoing a recovery and there are solid opportunities in the sector,” the analyst added.
Last month, Babcock & Brown’s executive Trevor Loewensohn said GHG’s returns to security holders have for a long time been sub-standard and this has been in no small part due to the lack of a unified board vision and strategy for the group.
“As one of GHG’s largest existing security holders, we believe the cash offer will solve this dilemma, which has been hanging over the heads of GHG’s security holders. As a security holder we have sought to assist the Company in driving a new strategy to restore value, but have not been able to secure the support of the major security holder in this respect,” Lowensohn said.
Mulpha has already entered into a pre-bid acquisition agreement with Babcock & Brown to buyout its 14.99% stake in GHG for 85 cents.
Another analyst said it was no surprise Babcock & Brown made the agreement with Mulpha as the investment bank had been looking for an exit strategy since acquiring a stake in GHG from Parker Global Strategies in March 2004.
“Babcock & Brown has been trying to change the direction of GHG but history is on GHG’s side, the last bid to overthrow GHG was back in 2003 when PGS and Greg Paramor’s James Fielding was unsuccessful,” the analyst said. “However, PGS and James Fielding lost its bid to drive out the management of GHG in a close call – 51.67% to 48.33%.”
“Make no mistake there will be shareholders looking to sell but Mulpha will not buy GHG for a bargain and the current share prices of 94 cents shows shareholders think the trust is worth more than 85 cents.
“It is interesting to note that GHG has not received a counter offer,” the analyst concluded.
By Nelson Yap
