DNZ ready to drop Argosy takeover

Tim Storey. Photo / Brett Phibbs

DNZ Property Fund may throw in the towel in its battle to take over the $900 million listed Argosy Property Trust.

Tim Storey, DNZ's chairman, said that if Argosy unitholders voted at today's annual meeting to buy out the management, plans to merge the two businesses might be ditched.

"On the basis that the Argosy internalisation proposal is passed by unitholders, there will be substantial costs incurred and the future benefits of the merger proposal with DNZ would be reduced considerably. On this basis, DNZ would withdraw its current merger proposal," he said.

That decision followed backing from cornerstone unitholder MFL Mutual Fund to use its 22.35 per cent per cent to vote in favour of the Argosy management deal, a move one Argosy backer said would almost certainly result in internalisation proceeding and DNZ's challenge failing.

Storey said the battle was not over yet.

"If the internalisation proposal is rejected, DNZ is committed to engaging promptly and constructively with Argosy directors and management with a view to developing a merger proposal to be put to Argosy unitholders promptly with a view to finalising the merger by November.

"If Argosy unitholders vote against the internalisation this will ensure Argosy unitholders preserve the opportunity to consider a merger proposal with the associated benefits of avoiding the substantial costs involved with internalisation and the set-up of a new management company.

"DNZ hopes unitholders will consider the benefits that could be available if a merger with DNZ were to be progressed by Argosy instead of internalisation," Storey said.

Shane Solly of Mint Asset Management, which owns Argosy units, predicted big moves today.

"We want to see changes to the board subsequent to the annual meeting regardless of what the outcome of the resolutions is ... It is really important that unitholders take the time to read all the documents and vote."

Argosy's annual meeting: 2pm today, Ellerslie Event Centre, 80 Ascot Ave, Greenlane.