15 March 2016 – Expansión
The British fund Polygon is legally mobilising itself to try to obtain the maximum value from Realia. The fund, which controls an 8.53% stake in Realia through various financing vehicles, considers that the price of €0.80 per share that the Mexican tycoon Carlos Slim is offering in his takeover bid “is clearly a long way from a fair price”. The fund, which is headquartered in London, is demanding at least €1.78 per share, more than double the bid price. In letters to the National Securities Market Commission (CNMV) and the Board of the real estate company, Nicolas Dautigny, one of the Directors of European Investment at Polygon, says that the price of €0.80 per share that Slim is proposing, through Inmobiliaria Carso, “is not fair” and “significantly undervalues the company’s assets”.
The letters, to which Expansión has had access, copy in the law firm Araoz y Rueda Abogados, advisors to Polygon, and thereby begin the legal procedure to demand a higher price for the takeover.
In its letter to the Board of Realia, Polygon urges the governing body to engage an independent investment bank and to look for “alternative buyers” for the company “in order to maximise its value”. “Otherwise, Slim will take control of Realia without paying the fair price”, he adds.
Meanwhile, in its nine-page letter to the CNMV, the fund lists a number of arguments that, in its opinion, justify that the price of the takeover bid should be higher. The first is the net asset value (NAV) per share that the company itself assigns its assets. According to Polygon, the company has set a net asset value of €1.40 per share. That should be the starting point. Polygon says that the takeover bid should be higher than that price because “the value of the assets published by the company is too conservative compared with other companies in the sector in terms of the appreciation of its real estate assets in Spain in 2015”. Specifically, “if we apply the same increase that Colonial saw in its assets during 2015, i.e. 16%, then Realia has a NAV value of €1.78 per share”, explains Polygon.
Polygon warns the CNMV about the financing agreements between Slim and Realia, which are happening in parallel to the takeover, and says that it understands that “the Board’s duty of neutrality has been breached” by Realia, which may constitute a “serious violation” of the Securities Market Act, and it calls upon the CNMV to investigate this matter.
Original story: Expansión (by M. Á.Patiño)
Translation: Carmel Drake