Property takeover bid steps closer

DNZ Property Fund's hostile takeover attempt on Argosy Property Trust took a step forward yesterday with the predator releasing details to NZX.

DNZ issued a merger proposal overview including transaction rationale, key elements of the deal and steps needed to proceed, including approval of Argosy and DNZ investors.

DNZ chairman Tim Storey acknowledged the deal was technically a takeover.

DNZ's documents released to NZX predicted that creating one DNZ/Argosy $1.6 billion real estate entity could save investors between $3 million and $3.5 million a year.

The business would rank behind Kiwi Income Property Trust on the NZX in terms of asset value but ahead of most other listed real estate investors and much larger than two stand-alone entities.

The deal could be completed by August, about the same time as Argosy's $32.5 million management internalisation was due to be finished. But that would depend on a "good engagement" with Argosy, DNZ said.

Argosy's independent directors said this month investors should stay on-track with the internalisation deal, that they were focused on the best outcome and value for unit-holders and internalisation did not preclude a future merger.

Unit-holders would get greater value from an initial internalisation along the lines proposed, Argosy said.

DNZ said yesterday that if the deal went ahead, Argosy would be merged into DNZ's corporate structure and unit-holders would get shares in DNZ, which would continue as the ongoing listed corporate entity.

Some Argosy board and management team members would be offered jobs with DNZ, DNZ said.

Approvals would be needed from the Overseas Investment Office and NZX. Independent export reports would also need to go to DNZ shareholders and Argosy unit-holders.