Scanlon stake casts shadow over Australian Unity fund takeover

While Hume is yet to indicate its intentions, declining a request for comment from The Australian Financial Review this week, its growing position could allow it to stymie the shareholder support needed to approve the takeover.

Adding to the uncertainty, the Australian Unity-run fund has adjourned for two weeks a meeting that was set for November 7 to vote on the approval.

The Australian Unity fund’s board has already endorsed the $495 million takeover bid by its suitor, a consortium between Charter Hall and Abacus Property Group.

The partnership had earlier established a 19.9 per cent stake in its target. However, as Hume began increasing its stake, the Charter Hall-Abacus bid vehicle, known as CHAB, responded late last month by cashing out its own stake entirely.

The unusual move was widely seen as a tactic by the consortium to increase the prospects of their bid receiving sufficient approval by shareholders. The consortium is prevented from voting on any stake it holds.

Approval for the mooted takeover requires 75 per cent support of those voting. The pool of prospective voters increases with CHAB’s sell-out, thereby diluting the relative size of Hume’s vote and its potential to thwart an approval.

Hume was created out of the family office of Financial Review Rich Lister Peter Scanlon and has grown into a significant multifamily office since its launch in 2015.

Hedge funds which held positions in the stock have been closing out their swaps in recent weeks, allowing them to take up a right to vote.

Advised by JPMorgan, the CHAB consortium had increased its bid to 3.04 per share from $2.95.

Its takeover bid came six months after the fund rejected an earlier proposal from US-listed Starwood, which valued the company at $2.87 a share. The offer was a downward revision from an initial bid of $2.95 a share, following the completion of an exclusive due diligence.