Charter Hall’s pursuit pays off as pubs giant accepts $760m bid
Hotel Property Investments has succumbed to a relentless takeover campaign from real estate giant Charter Hall and super fund Hostplus, with its board recommending shareholders accept the $760 million offer.
That recommendation comes just two days after Charter Hall and Hostplus said that they had more than 50 per cent of acceptances in hand, giving them a controlling stake in the ASX-listed takeover target.
Together, Charter and Hostplus are already the biggest pub owners in the country, a position consolidated by their takeover of ALE Group for $1.7 billion three years ago.
HPI’s portfolio has close to 60 pubs such as the Regatta and Crown hotels in Brisbane, and the Gregory Hills Hotel near Campbelltown in Sydney. Most 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.
The HPI board capitulated on Friday after a months-long campaign by Charter Hall and Hostplus. It had repeatedly rejected an initial bid and a subsequently sweetened offer, both of which, it said, undervalued the pubs landlord and its growth strategy.
By Friday morning, however, the acceptances to the takeover offer were still rising and represented 53.48 per cent of the shareholders. The HPI board acknowledged that this meant the bidders could take control of the board and ultimately steer the company’s strategy.
“The bidders have said that they intend to be active major security holders and conduct a review of HPI’s portfolio and management, as well as its distribution and capital management policies,” the HPI board said.
“There is a risk that the current decision-making, operations and/or strategic direction of HPI may change in a way that could be detrimental to the minority investors in HPI.”
Growth strategy
The all-cash takeover offer is $3.785 per security, but will decrease to $3.752 for those who accept from 2025.
Charter Hall and Hostplus’ initial bid was in September and the consortium extended the offer several times. The HPI board pushed back, unveiling a growth strategy for its shareholders that involved adding EV-charging stations to its properties and embedded electricity networks, hotel accommodation and fast food outlets.
Charter Hall chief executive David Harrison said that the consortium would use its controlling stake to rejig the board and the company’s strategy.
“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,” he said.
Despite recommending on Friday that shareholders accept the offer, the HPI board maintained that the deal was “not compelling” and “materially undervalues the company’s portfolio.
However, the board said the bidders would make significant changes to the company that would make it harder for minority investors to sell securities and get better returns than the current takeover offer.
“The HPI directors consider that it is likely that there will be changes to the governance and strategy of HPI. The increase in ownership will also impact the free float, future liquidity and broad investor appeal of an investment in HPI,” the board said in the statement to the ASX.
Even if the bidders gained less than 90 per cent of the register, they might also push for the pubs landlord to be delisted, the HPI board said.
