AMP grabs $31m stake in early raid on Capital

The takeover battle for Government landlord Capital Properties intensified yesterday when the country's biggest fund manager, AMP Capital Investors, bought 10.4 per cent for $31 million.

AMP has paid $1.35 a share for Capital, which had been trading this week at $1.20, and gets the power to block a suspected full takeover bid from 19.9 per cent shareholder Kiwi Income Property Trust.

AMP took the stake in a lightning raid. Broker First NZ Capital told the NZX early in the morning it had orders to buy 23 million shares, conditional on getting the slice within two days. But just over an hour later, it said it had bought the stake, paying a 15c a share premium.

Chief executive Chris Gudgeon was chipper about a large chunk of his company changing hands.

"It's great for our shareholders and it's fantastic that they stood in the market to pay that price," he said. "The market has recognised the value of the stock."

Kiwi chief executive Angus McNaughton said the price made the $1.15 he paid late last year look good.

"We're delighted with the price," he said. "But there's a lot of water to go under the bridge on this deal yet."

Throughout last year, the $500 million Capital was the subject of takeover rumours, eyed by predators for its high-quality real estate, its internal management contract, long list of premier tenants and bright development prospects.

On November 19 rival landlord Kiwi paid $53.4 million for 19.9 per cent of Capital but did not declare its intentions.

Kiwi and Capital have since been critical of each other and Capital has put up for sale its management company, one of its most valuable assets.

Now, Kiwi is calling for a meeting of Capital's shareholders to discuss the management contract sale, which one analyst predicted would sell for more than $30 million.

One consultant predicted the 10.4 per cent purchase put the heat on Kiwi and McNaughton.

"It would appear that Angus now has to come up with an offer topside of $1.35, much more than he was probably contemplating when he bought at $1.15.

"This also changes the dynamics of the special meeting, depending on which way the new shareholder is inclined. If the new buyer favours Capital's board position, Kiwi has little hope of reaching 75 per cent."

In a newsletter to shareholders this month Capital predicted a 22 per cent lift in pre-tax earnings for its shareholders in the next two years.

* MGP has received overwhelming support from existing and new investors in the institutional book-build which closed yesterday. The application price was set at $1.09 a unit.