BWP hits 58pc ownership to secure Bunnings deal
Bunnings Landlord BWP Trust is closing in on 60 per cent ownership of smaller rival Newmark Property REIT after passing the minimum support threshold for its merger deal to go ahead.
As of Monday morning, Wesfarmers-owned BWP Management Limited held 57.5 per cent of voting power in NPR, well above the minimum acceptance level of at least 50.1 per cent of all NPR securities.
Newmark Capital boss Chris Langford said “98 per cent of the market” had listened to the fund manager and “ignored the bad news stuff” being spouted by a small, but vocal minority.
“Our investors have agreed with us. It’s the right thing to do and in their best interests to accept the BWP offer. We’re really pleased this has occurred,” Mr Langford told The Australian Financial Review.
This 57.5 per cent acceptance includes an 18.3 per cent block owned by Newmark Group and its directors.
NPR security holders that accept the BWP offer will receive 0.4 BWP securities for every one NPR security, representing an implied price of $1.39. This represented a 43.1 per cent premium to NPR’s last closing price before the market was informed of the takeover offer on January 24.
However, it represented a 17 per cent discount to the highly geared fund’s net assets per unit, and well below its December 2021 $1.90 float price.
Mr Langford, who defended the merger as representing the “best outcome” for NPR’s unitholders, said with 20-30 per cent of the register held by short-sellers and hedge funds, all of whom would accept the offer now that it has been declared unconditional, the final acceptance figure could end up over 80 per cent.
The BWP offer closes on April 12. It declared its offer unconditional and best and final late last week.
Should BWP end up with over 90 per cent of the NPR share register, it will look to compulsorily acquire the remaining units and delist NPR.
If BWP ends up with less than 90 per cent, but more than 75 per cent of the NPR share register, it may also seek approval to delist NPR, which would then become an unlisted trust controlled by BWP.
The merger will create a $3.5 billion Bunnings-anchored large-format landlord through the addition of NPR’s $560 million portfolio of nine large-format properties, including four Bunnings properties in Melbourne.
The deal struck between Newmark Capital and BWP also included a contentious $22.5 million payment to acquire NPR’s manager Newmark REIT Management Limited.
That hefty payment drew the ire of activist investor Charlie Kingston and veteran REITs fund manager Winston Sammut, director of property at AFL legend James Hird’s Euree Asset Management (which has a 2.5 per cent interest in NPR).
Mr Sammut called the manager payment “obscene” in light of how poorly NPR had performed as a listed company and argued it should be shared with unitholders. However, his attempts to secure enough unitholder support and call an extraordinary general meeting failed.
He told the Financial Review’s Rear Window column last week: “If any of the [Newmark] principals come to market again, I won’t put a cent into their investments.”
