(…) Colonial, the real estate company whose shareholders include the Qatari sovereign fund, Villar Mir and the Mexican group Finaccess, has launched a process to evaluate the purchase of Axiare, in an operation that would involve the launch of a takeover bid.
According to financial sources, Colonial has engaged JPMorgan to analyse the process for buying its competitor as well as the options for financing the deal. In addition, the real estate company is reportedly sounding out several international investment banks regarding this operation. Axiare has a market capitalisation of €963 million.
The operation, known internally as Project Tiger, is being conducted with the maximum discretion, due to the concerns that Colonial’s recent share capital acquisition has generated amongst the Socimi’s management team.
On 17 October, the real estate company chaired by Juan José Brugera became Axiare’s largest shareholder, when it acquired 15.09% of its share capital, off market, from the management company Perry Partners. Until that point, Perry had been the Socimi’s largest shareholder, with a stake of around 19%. (…).
The fund manager generated significant profits from the sale of most of its stake in Colonial, given that it paid €10 per share when it acquired its stake and sold at €12.50 per share. Perry still holds a small stake in Axiare, which it wants to sell and Colonial is the best positioned investor.
Perry is not the only fund that acquired shares in the Socimi when it debuted on the stock market that is now willing to sell its stake (and generate significant profits in just over two years). In this way, several investors have approached Colonial with the intention of reaching an agreement similar to the one negotiated with Perry, according to sources close to the real estate company.
Meanwhile, Colonial has been focusing on growing in size for some time. Having resolved its financial problems of the past, and with a stable shareholder base, the real estate company has been undertaking investment operations amounting to around €500 million for several years. (…).
Nevertheless, its strategy to invest only in offices in Madrid, Barcelona and Paris, combined with the enormous buying pressure that currently exists in Spain’s two largest real estate markets, has caused Colonial to look for “more imaginative solutions”, such as the purchase of a 15% stake in Axiare.
The Socimi, which is obliged to distribute at least 85% of its profits to its shareholders, welcomed the entry of Colonial into its share capital initially.
Nevertheless, in recent weeks, the team led by Luis López de Herrera-Oria has strongly criticised the operation and has not hesitated in hiring legal advisors to analyse it. (…).
The reality is that Axiare’s share price has experienced several ups and downs since the entry of Colonial. Nevertheless, in recent days, its value has increased to exceed the threshold of €12.50 (the price paid by the real estate company), to reach €13.40 on Friday, having risen by 1.28% during trading. Since Colonial acquired its stake, Axiare’s shares have appreciated by 12%.
If Colonial ends up completing the takeover, it would take control of a new portfolio worth €1,049 million, in one fell swoop, which it would add to the €7,556 million that it currently manages (…). By way of context, following its merger with Testa and Metrovacesa, Merlin controls assets worth around €9,300 million.
Original story: Expansión (by R. Ruiz/D. Badía)
Translation: Carmel Drake
Translation/Summary: Carmel Drake