Centuria Capital Group and Augusta Capital Limited have entered into a Bid Implementation Agreement relating to an offer by Centuria to acquire Augusta for NZ$180 million ($174 million).
Augusta is one of New Zealand’s leading listed real estate funds management businesses managing NZ$2.0 billion (A$1.9 billion) in assets across a range of listed, unlisted and private funds.
The acquisition of Augusta would result in the integration of one of New Zealand’s leading real estate funds managers into Centuria’s established platform. The Transaction is expected to deliver immediate scale for Centuria across the New Zealand market, with a concentration towards Auckland, a resilient and globally recognised real estate market. Upon implementation, Centuria would become one of the leading funds management platforms in the Australasian region.
The Transaction complements Centuria’s existing expertise in the Office and Industrial markets with approximately 70% of Augusta’s assets under management (AUM) invested in these two sectors as well as diversifying Centuria's funds management revenues through an exposure to the large format retail market and New Zealand’s growing tourism sector.
The Transaction will be implemented by way of a full takeover offer under the New Zealand Takeovers Code. A copy of the Bid Implementation Agreement is attached to this announcement.
Under the Offer, Augusta shareholders will be able to elect to receive either up to NZ$2.00 in cash (Cash Consideration) or Centuria scrip (Scrip Consideration) (adjusted for any Augusta distributions) via a “Mix and Match” facility. The Offer price will be adjusted for any Augusta distributions from the date of the Bid Implementation Agreement, excluding a fully imputed permitted dividend of up to NZ1.625 cents per Augusta share, in respect of Augusta’s calendar quarter ended 31 December 2019.
The Augusta shareholders who elect to receive Centuria scrip will receive 0.807 Centuria securities in consideration for each Augusta share held.2 The Offer price of NZ$2.00 represents
- a 19.8% premium to the closing price of Augusta shares of NZ$1.67 on 28 January 2020 (being the day before this announcement was made) and
- a 28.3% premium to the 30 day VWAP of Augusta's shares of NZ$1.56 to 28 January 2020.
Augusta’s founders and significant shareholders, Mark Francis (17.2%) and Bryce Barnett (6.1%) have both entered into pre bid lock up agreements agreeing to accept the Offer for all of their Augusta securities (including those held through associated interests) and to elect to receive Scrip Consideration in relation to their existing shares (21.0% on a combined basis) and cash for the shares they will receive in respect of their Performance Share Rights (1.3% on a combined basis) that will vest as part of the Transaction.
Mark and Bryce will continue to lead the Augusta funds management platform as key executives of the Centuria group and have entered into escrow arrangements in relation to their Centuria holdings and three year employment contracts, if the Offer is successful.
In addition to Mark and Bryce's combined holding of 23.3% , other Augusta shareholders holding a further 12.9% of Augusta shares have entered into lock up agreements and have agreed to accept the Offer.
As a result, Centuria presently has lock-up agreements in respect of 36.2% of the Augusta shares and anticipates that further Augusta shareholders will enter lock-up agreements as the Offer process progresses.
Centuria chairman Garry Charny said “The Centuria board has been considering a New Zealand platform acquisition for some time. Our engagement with the Augusta independent board committee, chaired by Augusta chairman Paul Duffy and the company’s management, has been professional and of a high calibre. In addition, the Augusta due diligence process has been greatly aided by the high quality of information provided, consistent with the business as a whole. The Centuria board unanimously supports the Takeover and is convinced of the strong compatibility between the two platforms.”
Centuria’s Joint CEOs, John McBain and Jason Huljich add “The acquisition of Augusta is consistent with our existing strategy and the two groups are extremely compatible. We are attracted to Augusta’s leading position in New Zealand, its strong distribution platform and its fund origination capability. We are delighted that the Augusta executives will join the Centuria group and we will work closely together to continue to grow the Centuria/Augusta funds management platform in New Zealand.
“Centuria and Augusta have proven themselves as leading real estate fund managers in their respective countries and by combining them we see an opportunity to significantly grow the enlarged group in Australasia. Crucially, both teams have similar cultures and investment philosophies which will continue to underpin this growth strategy.”
The Centuria transaction will be funded by a combination of existing cash reserves, debt, scrip and the net proceeds of a A$60 million placement. The placement is fully underwritten at an issue price of A$2.34 per security.
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