Capital Properties weighs up AMP's offer

A flurry of meetings is under way at Capital Properties in Wellington as a special taskforce of the listed landlord's directors meet to discuss AMP's surprise takeover offer.

But the directors' deliberations on the merits of the deal will not be out this week.

Under the Takeovers Code, Capital has 30 days to respond to AMP's move, although Capital is expected to move faster than that because AMP's offer opens next Friday.

Capital directors James Ogden, Michael Cashin and Peter Coote were this week in a series of discussions with chief executive Chris Gudgeon over the surprise swoop by Stephen Costley's unlisted $591 million AMP Property Portfolio.

Costley said on Thursday he would mount his full cash offer within the fortnight.

Director Tony Frankham was overseas when Costley swooped but is also on Capital's newly-formed independent committee, specially convened on the heels of the offer.

The group of directors is expected to appoint an independent adviser to say whether Costley's offer is fair and reasonable.

AMP's takeover offer needs regulatory and shareholder approval to go ahead.

And because AMP is an Australian entity, its offer is subject to Overseas Investment Commission approval.

The offer closes on October 31.

Costley, who is AMP Property Portfolio general manager, said initial feedback from retail sharebrokers indicated Capital shareholders were more than willing to agree to the deal.

"I'm aware of feedback from various broking houses to say it's a fairly good price. We've asked people to keep their antennae up," he said.

AMP wants Capital for the diversification of property it would give Costley's fund and the quality of its assets.

Costley said around 75 per cent of AMP's portfolio was in Auckland. It has mainly retail assets.

Capital would complement AMP because of its strong weighting towards the Wellington region and the high number of government tenants occupying its buildings.

If the takeover succeeded, AMP would review Capital's portfolio and consider selling some buildings, Costley said.

"If we get to over 50 per cent of Capital, we would seek majority board representation and complete a review of Capital, looking at its operations and assets," he said.

He praised the blue chip tenant register and buildings.

Catherine Savage, managing director of AMP Capital Investors, said the AMP Property Portfolio was the largest unlisted real estate vehicle in New Zealand.

It owns office, retail and industrial assets and is building the new $72.5 million defence headquarters in Wellington.

Capital offer

AMP makes the case for its $1.42-a-share takeover offer for Capital. The offer is:

At a substantial premium to comparable benchmarks.

4 per cent higher than the highest price at which Capital shares have traded on the NZX - $1.36.

8 per cent higher than the NZX closing price before the offer was announced - $1.31.

10 per cent higher than Capital's net tangible assets at last balance date of March 31 - $1.29.

24 per cent higher than the average valuation of Capital by four independent analysts.

39 per cent higher than the Capital price on the NZX in November last year, before Kiwi Income Property Trust's cornerstone purchase.