There is no reason for an immediate sale due to its sound financial position and defensive revenue backed by long leases, an analyst says
AUSTRALIAN pub landlord Hotel Property Investments (HPI) jumped to a 19-month high on Monday (Sep 9), set for its best session in one-and-a-half years, after its top shareholder made a buyout offer valuing the company at A$716.5 million (S$622.8 million).
However, HPI rejected the share offer from Charter Hall Retail Real Estate Investment Trust (Reit), which has about a 15 per cent stake in the company. HPI said the offer of A$3.65 per share undervalued the company.
Shares of the pub landlord jumped as much as 6.6 per cent above the offer price to A$3.71, indicating shareholders were expecting a better offer.
The counter closed on Monday at A$3.74, up A$0.26 or 7.5 per cent.
Morningstar analyst Adrian Atkins concurred, saying it backed HPI’s rejection of the offer, and that there was no reason for an immediate sale.
“HPI is in sound financial health, and its revenue is defensive, thanks to long leases and relatively good-quality pubs,” he noted.
The Reit and its bidding partner, superannuation fund Hostplus, said the offer is fully funded and provided an attractive premium to HPI’s historical trading levels.
Its parent is Charter Hall Group, Australia’s largest pub owner and the operator of hotels such as Young & Jackson in Melbourne. REUTERS
