Pub landlord HPI rejects consortium’s $710m bid
Hotel Property Investments has rejected a $710 million takeover bid by Charter Hall and industry superannuation giant Hostplus, saying the offer materially undervalues the pub owner and ignores its growth prospects.
ASX-listed HPI owns 58 venues, mainly in Queensland and South Australia, and set out reasons for rejecting the $3.65-a-share offer in a letter to investors.
Charter Hall, one of the biggest owners of commercial property in the country, is already HPI’s largest shareholder.
“The offer does not compensate HPI security holders for the value of our portfolio, or the strength and outlook for our business,” HPI chairman Giselle Collins said.
“The offer does not provide any premium to HPI’s net tangible asset value, in contrast to ASX-listed REIT transaction precedents where control has typically passed at a substantial premium.”
There are signs of stabilisation in commercial property pub assets. HPI, which reported a $1.28 billion portfolio as at end-June, said rental income rose 3.2 per cent last year.
Consumer spending remains weak, however. MA Financial-owned rival Redcape, which owns 28 hotels valued at $972 million across NSW and Queensland and operates 25 of them, reported a 5 per cent decline in revenue to $355 million last year, as gaming, pubs and bottle-store sales all fell.
Rich Lister Justin Hemmes’ Merivale hospitality business has a commercial property portfolio worth, by some estimations, $3 billion. The pub-owning Laundy family has a $1.4 billion business.
Charter Hall moved into pub ownership in 2021 with the $1.68 billion purchase – also with Hostplus – of the listed ALE Property Group.
It triggered speculation about a takeover push for HPI in March when the parent company and subsidiary, Charter Hall Retail REIT, formed a joint venture to buy almost 15 per cent of the pub landlord for $97 million.
HPI said on Wednesday the offered price was a “minimal” 4.9 per cent premium to the share price on September 6 – the last trading day before the offer was made.
But Charter Hall and its retail property trust said the price was an 11.6 per cent premium to HPI’s closing price on March 27 – the day before the companies disclosed the purchase of its initial stake.
In its statement on Wednesday, HPI also said the price represented an implied yield of 6 per cent on its portfolio, a “significant” discount to the yield of other pubs owned by Charter Hall and Hostplus.
The price represented a 10 per cent discount to the value of HPI’s assets. Falling interest rates would likely boost the value of its assets, it added.
HPI’s hotels are mostly leased to Australian Venue Co, owned by PAG Asia Capital, or a joint venture between Australian Venue Co and Coles.
Charter Hall was contacted for comment.
