Charter Hall clears first hurdle in fight to control big name pubs
Property giant Charter Hall and superannuation fund Hostplus have taken control of a majority stake in Hotel Property Investments during a protracted takeover battle for the pub landlord, setting their sights on compulsory acquisition of the ASX-listed company.
Charter Hall and Hostplus’s $760 million takeover offer of HPI had received acceptances from 52.38 per cent of investors as of Wednesday. That allows its takeover offer to be declared unconditional despite strong opposition from the HPI board.
The takeover offer requires acceptances from over 90 per cent of HPI investors to allow Charter Hall and Hostplus to move to compulsorily acquire the company.
“It is our intention to get to 90 per cent [for a compulsory acquisition] and we will continue to see momentum build with acceptances, which have averaged 3 per cent per day for the last seven days,” Charter Hall chief executive David Harrison told The Australian Financial Review.
“We’ve been seeing some similar takeovers like Pacific Smiles where once acceptances reached 40 per cent, both retail and institutional investors came on board and now there about 90 per cent of acceptances.”
The takeover battle began in September when ASX-listed Charter Hall and Hostplus first lobbed a bid to take over owner of around 58 venues nationally.
Pubs in the HPI portfolio were included in The Australian Financial Review’s list of top 50 venues such as the Regatta and Crown hotels in Brisbane and the Gregory Hills Hotel near Campbelltown in western Sydney. The majority of the company’s pubs are on long leases to Queensland Venue Company, a joint venture between Coles Group and pub giant Australian Venue Co.
HPI’s directors have repeatedly recommended shareholders reject the takeover offer, even after it was increased to $3.85 per security – effectively $3.785 following payment of an interim distribution of 6.5¢ – in October, on the basis that it “materially undervalues” HPI’s $1.3 billion portfolio and its growth prospects.
Despite that HPI investors have steadily bought into the Charter Hall-Hostplus takeover offer. A flurry of acceptances followed after the bidders declared the offer would go unconditional earlier this month if they received the required minimum acceptance rate of 50.1 per cent.
Charter Hall’s unconditional takeover offer is an all-cash payment of $3.785 per security.
“When we announced the offer would go unconditional, investors knew that they would get their cash so it’s not a surprise,” Mr Harrison said.
With control of a majority stake in hand, Charter Hall and Hostplus will now look to review the HPI’s board and portfolio. The bidding consortium is keen to expand its pubs portfolio, which is already the biggest in the country after they acquired former ASX-listed landlord ALE Group for $1.7 billion three years ago.
The HPI board has not decided whether it will change its recommendation to reject the takeover.
An HPI spokesman said the company’s board would monitor the situation but remained adamant it would pursue its growth strategy of adding EV charging stations and embedded electricity networks, hotel accommodation, and fast food outlets.
“Our intention is to continue to manage HPI’s unique high-quality portfolio and execute our growth strategy as articulated by the CEO at the AGM, and which has been well received by our long-standing shareholders,” an HPI spokesman said.
