Ingenia owns and develops land lease communities, seniors rental villages, and holiday parks (Image: Ingenia)
Australian land lease operator Ingenia Communities Group has readmitted Warburg Pincus to its data room after the US private equity firm raised its takeover offer for a fourth time, giving rival bidder Avid Property Group until Tuesday to sweeten its bid.
Warburg Pincus’ latest non-binding proposal values Ingenia’s equity at about A$2.3 billion ($1.6 billion), according to a Mingtiandi calculation. Ingenia securityholders would receive A$5.55 cash per stapled security plus a distribution of up to A$0.05 for the half year to 31 December, taking the total to as much as A$5.60, according to an ASX filing from Ingenia on Friday. That is A$0.10 more than Avid’s proposal and 16.8 percent above Warburg Pincus’ opening offer.
Ingenia’s board said in a separate filing late on Friday that it has reinstated Warburg Pincus’ due diligence access, and invited Avid to make a matching or superior counterproposal by Tuesday, 10 November. Avid will retain its own due diligence access, Ingenia said. The board said it has not found the Warburg Pincus offer to be superior to its pending acquisition of Peet, and has not said that it intends to recommend the bid.
If Avid does not match the offer, Warburg Pincus wants the new agreement it signs with Ingenia to let a losing bidder keep due diligence access for four days after being matched, and to run its exclusivity to 14 December. That is one day before the 15 December second court date for the Peet scheme, which is the last point at which Ingenia can walk away from Peet for a superior offer.
Warburg Pincus’ A$5.55 cash price is a 50.4 percent premium to Ingenia’s A$3.69 close on 28 August, the last trading day before Warburg Pincus’ first approach became public, according to a Mingtiandi calculation. An Avid representative declined to comment on whether its consortium, which includes the Abu Dhabi Investment Council and Brookfield, will make a matching bid.
Locked Out Twice
Warburg Pincus lost access to Ingenia’s data room when Ingenia received Avid’s offer on 26 October, and again on 2 November after Avid increased its offer. Under Avid’s deed, the incumbent bidder has until four days after receiving a rival’s terms to come back with a counterproposal.
Andrew Fitzpatrick, managing director, Warburg Pincus
On 4 November, Ingenia rejected an amended Warburg Pincus proposal that sought the same four-day carve-out at an unchanged price after determining it was not a superior proposal. Friday’s higher price succeeded where that request had failed, reopening the data room to Warburg Pincus for a third time.
Conditions from Warburg Pincus’ earlier bids still apply, including due diligence, binding debt finance commitments, final investment committee approval, a binding scheme implementation deed, regulatory approvals, and termination of the Peet agreement.
That financing condition remains a point of difference with Avid. Avid has said it will fund its bid with equity and debt, and that its definitive documents would not be subject to a financing condition. Ingenia has described Avid as backed by a global sovereign wealth fund and a global financial sponsor, which people familiar with the bid identified as the Abu Dhabi Investment Council and Brookfield,
Splitting the Platform
Under its offer, Warburg Pincus would keep Ingenia’s land lease communities, while Discovery Parks, backed by Australian Retirement Trust, would take the holiday parks, and LDR Capital, part of Paul Lederer’s family office, would take the Ingenia Gardens seniors rental villages.
Avid plans to transfer the holiday parks business to Tasman Holiday Parks after completing its takeover. Either path would put Ingenia’s holiday parks in the hands of an existing operator, with Australian Competition and Consumer Commission approval a condition of both bids.
Ingenia’s holidays division generated A$63.2 million of EBIT in the year to June, and Ingenia Gardens A$11.3 million, according to Ingenia’s full-year results. Friday’s filing did not say what Discovery Parks or LDR Capital would pay for their portions.
Warburg Pincus opened with an A$4.75 bid in September, then raised its price to A$5.05 and A$5.25 before Avid’s A$5.35 approach drew a fourth Warburg bid of A$5.45, which Avid matched on 2 November.
Flagstone Hurdle
During the bidding war, Ingenia has kept working towards its A$992.3 million deal to buy Perth-based Peet. Walking away for a superior offer would leave Ingenia owing Peet a A$10 million reverse break fee.
On Thursday Ingenia signed an implementation deed with Bechel, part of Garry Brown-Neaves’ Brown-Neaves Investments, under which Bechel would buy 49.9 percent of Peet’s Flagstone City project at an agreed inventory value of A$615 million if the Peet scheme goes ahead, according to a separate Ingenia filing. Flagstone is a masterplanned community south-west of Brisbane with around 12,000 residential lots.
Signing the deed satisfies one limb of the Flagstone condition in the Peet scheme, which still requires ACCC clearance of the joint venture and no party becoming entitled to terminate before 8am on the second court date. If the Peet agreement is terminated and Ingenia pays the break fee while the Flagstone deed is still in force, Peet will contribute A$1 million towards Brown-Neaves’ costs, Peet said on Friday. Peet shareholders are scheduled to vote on the scheme on 7 December.
UBS and Denison Partners are financial advisers to Ingenia, with Gilbert + Tobin as legal adviser and Greenhill as independent adviser on the Warburg Pincus approach, according to previous Ingenia filings.