KEY POINTS:
ING Property Trust has ditched its plans to take over the NZX-listed medical landlord Calan Healthcare Properties Trust, saying discussions between the two trusts' boards have ended.
A year ago, ING, which already owns 19.9 per cent of Calan, said it wanted to take over Calan and benefits would flow to unitholders in both NZX-listed trusts.
But it issued a statement yesterday saying it was disappointed the opportunity had been lost. ING's independent directors wanted to go ahead with the takeover but Calan's board did not, ING said yesterday.
"The Calan board was not satisfied the proposal was one that justified progressing it further," it said.
Jeremy Nicoll, company secretary of both ING and Calan, said price was the sticking point.
"Getting the price that was acceptable to both sets of unitholders was the issue and you can organise it so it's straight down the middle or you can push it one way or the other," he said.
ING had planned to complete the deal through a scrip swap with Calan, but the ratio of Calan units to ING units had not been revealed.
Nicoll refused to say whether ING planned a one-for-one swap of Calan units for ING units, trading at similar prices. ING units closed at $1.26 yesterday, while Calan closed at $1.32.
Bruce Davidson, Calan's chairman, said the independent directors could not recommend ING's proposal for a scrip-for-scrip exchange ratio, even though a draft appraisal report that went to both boards on May 16 found the exchange ratio was fair.
In January last year, ING announced a full takeover offer for Calan with a cash and scrip offer equivalent to $1.25 a unit. But in February last year Calan's independent directors unanimously recommended against the offer because the price was too low.
An independent appraisal report by Ferrier Hodgson found the offer undervalued Calan by 20c to 34c.
"ING's offer is well outside Ferrier Hodgson's appraisal of Calan's fair value of between $1.41 and $1.55, with a mid-point of $1.48," Calan's independent directors then said.
Within a few weeks, ING got control of the company running Calan, announcing on March 9 that it had bought the management rights to Calan. Since then, ING said it had been holding takeover discussions.
ING has a diversified portfolio of commercial, industrial and retail properties valued at $1 billion, compared with Calan's $221 million invested mainly in the medical sector.
One analyst said ING had severely misread the situation with Calan.
ING also announced yesterday a unit buyback programme, saying it would buy 54 million units or about 10 per cent of the trust's securities. This followed the termination of the Calan merger and the fall in ING's unit price, it said. ING's net tangible asset backing was $1.30.
