Blackstone Group LP is willing to go above rival Oxford Properties Group's A$5.50-per-unit offer for Investa Office Fund if the target is able to meet seven new conditions that it has set.
A day after the Canadian property company disclosed its intention to buy the Australian fund, the global private equity giant wrote in a letter to Richard Longes, the chairman of Investa Office Fund's responsible entity, that it will increase its offer to A$5.6215 per unit from A$5.45 if certain conditions are met.
Minus the distribution that Investa has declared, the conditional increased offer translates to A$5.52 per unit, still higher than the competing bid.
The conditions to effect the bid increase are: Investa Listed Funds Management Ltd.'s board's continued unanimous backing of the Blackstone bid; the adjourned Sept. 6 merger vote meeting being set on or before Sept. 14; the Investa Listed board agreeing to increase the payable break fee to Blackstone to A$33.0 million from A$20.0 million; the amendment of a standstill provision in a May 3 confidentiality deed signed between the concerned parties; Investa Listed rejecting Oxford's request for due diligence and nonpublic information; making sure that only unit holders of the target as of Sept. 4 are eligible to vote at the rescheduled merger meeting; and for the responsible entity's legal counsel to make amendments to related takeover documentation.
Blackstone said it does not plan to increase its offer any further and that that is its best and final offer, in the absence of a superior one. It added that the improved proposal represents one of the highest M&A-related premiums to pre-proposal market prices in the last five years in Australia's real estate investment trust sector.
Investa Listed said it will work with Blackstone to make the conditional price increase effective, much like it did when Blackstone increased its offer for the fund the first time to secure the backing of a unit holder with a nearly 20% stake in the fund.
The board also said it will aim to hold the unit holder meeting as soon as practicable, subject to reaching an agreement with Blackstone and receiving judicial advisement.