THE tussle for Australand's key non-residential assets has turned hostile, with GPT Group determined to proceed with a takeover proposal despite its initial overtures being rejected.
Brokers have said that in order to strike a deal, GPT must win over Australand's major shareholder, CapitaLand. But that stake won't be won without GPT being forced to pay a significant premium to Australand's net tangible assets.
In a short statement, GPT's management said on Friday that it was "committed to advancing a proposal which it believes is in the best interests of Australand's and GPT's security holders".
Australand said the indicative price, as yet undisclosed to investors, was at a premium of $140 million to the June 30 book value.
"We note that this premium represents 24.3? per Australand security, which is 7 per cent above its current stated net tangible asset backing of $3.46 per security. GPT believes its proposal provides a compelling value proposition for the security holders of Australand," GPT's statement says.
Analysts at the Commonwealth Bank said they believe CapitaLand may accept, given Australand's growth prospects may be unattractive compared with opportunities within Asia and CapitaLand could crystalise a gain above book value.
They noted CapitaLand has a new chief executive starting on January 1, which could result in a new direction. "Based on GPT paying a 10 per cent premium to book value and equity raising at $3.40, we believe GPT could increase calendar year 2013 earnings by 8.2 per cent."
The move has been made before GPT and Australand's financial years end on December 31.