Changes brewing at Investa after failed Dexus bid

Dexus CEO Darren Steinberg says the price offered made sense. Picture: James Croucher

Investors are bracing themselves for a raft of changes at the $2.5 billion Investa Office Fund after a takeover bid mounted by Dexus Property Group failed to win the requisite support in a unitholder vote on Friday.

The fund’s manager appointed four new directors in the wake of the meeting, which put an end to Dexus’s six-month tilt for the office giant, and focused attention on the intentions of Cromwell Property Group, which made a shock entry onto IOF’s share register this week with a near-10% stake.

The failure of Dexus’s bid came as little surprise. Investors knew Cromwell would not vote in support of Dexus’s takeover bid, and that the move would kill Dexus’s bid, which required support from more than 75% of unitholders.

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“We knew all along it would be tough to get that 75% hurdle, but we felt it was a good proposal,” chairman of IOF’s independent directors, Deborah Page says.

“But that’s business … we worked diligently through a highly exhausting and professional process to do what is our job.”

Dexus is unlikely to submit another bid for the fund.

It comes back to the underlying real estate, you can’t forget that … the price we put forward made a lot of sense

“We don’t see any point taking it any further at this point in time,” Dexus chief executive Darren Steinberg told The Australian.

“It comes back to the underlying real estate, you can’t forget that … the price we put forward made a lot of sense.”

What Cromwell now plans to do is unknown. While the group has not yet put forward a proposal to the independent board committee, analysts have outlined three plausible alternatives: partnering with a group to privatise IOF; calling an extraordinary general meeting to vote out the existing manager in favour of themselves; or Cromwell could negotiate with ICPF to purchase the management platforms of both ICPF and IOF.

Of the three alternatives, Citi analysts believe the third is most likely, noting that Cromwell had previously been a keen bidder to buy the Investa management platform prior to its eventual sale to ICPF

The fund’s manager, Investa Listed Funds Management Limited, moved quickly in the wake of the meeting to appoint four new directors to the board, including Investec director Richard Lon­ges, Hunter Phillip Japan chairman Robert Seidler AM, Dragoman director John Fast and Asciano director Geoff Kleemann.

It is understood existing directors will contemplate their future over the weekend. The directors will meet for the first time on Monday.

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