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A $518 million takeover bid from ARA Asset Management has been launched today that would see the fund manager take control of Cromwell Property Group (ASX: CMW).
ARA via its wholly owned entity ARA BidCo intends to acquire 29 per cent of all Cromwell securities that ARA does not already hold an interest in for $0.90 per share.
If successful, ARA would be increasing its shareholding in the property group to 53 per cent, giving the Singapore-based company control over the property group.
Cromwell has advised shareholders today to take no action, noting the "unsolicited and opportunistic" nature of the offer.
On the other side of the bid ARA is being backed by corporate raider Dr Gary Weiss (pictured) who attempted to secure a seat on the Cromwell board two times, once in November 2019 and again in March 2020.
ARA says its bid is compelling, with the offer price coming in at a 3.4 per cent premium to Cromwell's last closing price of $0.87 on 22 June and would provide investors certainty of value during this current period of economic anxiety caused by the COVID-19 pandemic.
Further, ARA highlights how it believes Cromwell will attempt to undertake a material equity raising at a discount to the ARA offer price.
It is likely that if successful ARA would seek, yet again, to install Weiss as a director.
"ARA has become increasingly concerned with the poor operational performance, increased complexity, erratic strategy, overall governance and risk management protocols at Cromwell and has chosen to present an Offer directly to Cromwell securityholders," says ARA.
"As Cromwell's largest securityholder ARA has, on a number of occasions, sought to constructively engage with the Cromwell Board in order to ensure securityholder value is protected and maximised.
"It is ARA's view that a reinvigorated Board, with appropriate experience and a clear proprietorial focus, will bring necessary expertise and provide appropriate oversight of Cromwell management, to drive a clear and considered strategy and improved operational performance of the business."
Cromwell says it intends to make a further announcement in due course when it has assessed the terms of ARA's offer.
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