Babcock Opens Self-help Books Ahead Of Takeover
Sydney Morning Herald
Tuesday July 1, 2008
BABCOCK & Brown Communities will look at all possibilities to push its ailing share price closer to its underlying asset value as part of a strategic review.
The group's independent chairman, Professor Judith Sloan, confirmed yesterday ABN Amro had been appointed as an external adviser to undertake the review. It was flagged days before Lend Lease emerged as the buyer of a strategic 6.18 per cent stake in BBC, having paid 45c a security to the vendor, ING. BBC's average net tangible asset value is about 80c. The chief executive of Lend Lease, Greg Clarke, has identified retirement homes as a growth sector for his group. Babcock & Brown is the other major investor in BBC. It has a 10 per cent direct stake and holds a potential poison pill in the form of a 10-year management agreement. Termination of the agreement would require approval from Babcock & Brown and could cost a predator between $30 million and $50 million. Any takeover of BBC would need to be friendly to persuade Babcock & Brown to relinquish the management and the lucrative annual management fees. "ABN Amro has a high-level mandate to narrow the gap of the real value [net tangible assets] and where the securities are trading on the ASX," Professor Sloan said. "Every option is on the drawing board. That could include potentially merging our assets with other similar businesses, trading down other unitholder stakes - such as Babcock & Brown's 10 per cent to overseas interested parties - selling assets and attracting other interested partners. "It must be pointed out that this is a review agreed to by all the BBC board, including our Babcock & Brown representatives. "But we must improve the value of the business to investors, and it has not helped us that our mothership [Babcock & Brown] has had its troubles." BBC owns and manages 56 retirement villages and 29 aged-care facilities in Australia and New Zealand with about 10,000 retirement units and 2200 residential beds. Its biggest competitor, with a 3 per cent market share, is FKP, which two weeks ago rejected a $1.3 billion offer from Lend Lease and AMP. BBC closed down .05c to 43c yesterday, giving it a market capitalisation of $280.24 million.AMP Capital owns about 3 per cent of the national retirement home business, but did not make a joint bid for FKP with Lend Lease, as was stated in yesterday's Herald.Correction: AMP Capital owns about 3 per cent of the national retirement home business, but did not make a joint bid for FKP with Lend Lease, as was stated in yesterday's Herald.
© 2008 Sydney Morning Herald
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