Tycoon’s $1.9b takeover bid for Abacus Storage faces threat
Self-storage operator National Storage REIT has bought a stake in its listed rival Abacus Storage King, in a move that could potentially thwart a $1.9 billion takeover proposal for it by a South African billionaire.
Known by its ticker NSR, the operator has taken 4.78 per cent stake in its Abacus-run rival, which this month received a conditional takeover proposal from a consortium formed between Nathan Kirsh’s family office, Ki Corporation, and New York-listed giant, Public Storage.
Abacus Property Group, is spinning off its Storage King properties into a separate Australian Securities Exchange-listed real estate investment trust.Kirsh already controls 59.47 per cent of the register of Abacus Storage King – known by its ticker as ASK. That stake is held both directly and indirectly, through Kirsh’s substantial interest in Abacus Group, which manages ASK and retains a shareholding in it.
But crucially, under corporate rules that stake would be excluded from any shareholder vote on a scheme of arrangement. As a result, NSR’s small interest takes on a much greater significance and could potentially be the nucleus of a blocking stake for the takeover. It would only need around 10 per cent to torpedo the proposal at a shareholder vote.
Confirming its recently acquired stake on Monday, NSR said it is “does not presently intend to make a competing proposal for ASK”.
Instead, NSR said it considered ASK to be “a compelling investment at the prevailing price”, noting the consortium’s offer was well below ASK’s net tangible asset value.
Seasoned market observers, who did not want to speak publicly, said NSR’s move appeared designed to thwart or block the proposed takeover.
Backed by the deep pockets of Kirsh and Public Storage, one of the world’s largest players in the sector, Abacus Storage would present more substantial competition to NSR, threatening its dominance of the industry in Australia, they said.
Abacus spun off the self-storage operator into a separate ASX-listed operator two years ago, accompanied by a capital raising. It owns close to 150 storage facilities and development sites, spread across the Australian mainland and New Zealand, in a $3 billion portfolio.
But the Kirsh-led consortium said the purpose of that spin-off – to unlock value, improve access to capital and fast-track the development pipeline – had not been achieved and nor was it likely to be achieved under the current structure.
The consortium’s all-cash offer is at $1.47 per security, a 26.7 per cent premium to its last closing price before the offer was made. Taking into account its existing stake, the consortium is putting up around $783 million to buy out the minority interests in ASK.
The offer is at around an 8 per cent discount to the net tangible asset value of ASK’s portfolio, which was reported as $1.60 per security at its interim results in February.
In a further twist on the unfolding situation, Public Storage had previously launched a bid to buy NSR five years ago.
That bid ultimately flopped when Public Storage, one of the world’s biggest operators, walked away from the bid during a period of market volatility.
