Babcock & Brown rival moves to block takeover deal

A rival bidder of Babcock & Brown's Communities arm, Prime Retirement Trust, is seeking to force shareholder approval for significant parts of Lend Lease’s competing $236.8m offer to buy a 40 percent stake in the retirement village investment fund.

Prime Retirement Trust, a listed retirement investment fund, is attempting to block a $236.8 million deal between Babcock & Brown Communities and property land developer Lend Lease Corporation. 

Prime is seeking a declaration of unacceptable circumstances from the Australian Takeovers Panel regarding Lend Lease’s plan to acquire 41 percent of Babcock & Brown Communities because certain portions of the proposed agreement are not subject to shareholder approval.

Babcock & Brown Communities’ board had earlier rejected Prime’s offer to acquire 40 percent of the Australian Stock Exchange-listed retirement village investment fund and opted instead to accept the competing offer from Lend Lease.

Under the terms of the Lend Lease deal, announced at the beginning of the month, Babcock & Brown Communities’ manager, Babcock & Brown Limited, agreed to sell management rights and its 12.5 percent stake in the fund to Lend Lease in a transaction valued at A$66.8 million ($53.4 million; €37.4 million). Of that, A$17.5 million would cover the contract, and the remainder would cover its equity stake, payable in two tranches.

Additionally, Lend Lease would purchase 250 million new shares in Babcock & Brown Communities for A$170 million, which would altogether give it control of about 41 percent of the fund.

Babcock & Brown Communities plans to ask shareholder approval for the sale of Babcock & Brown’s equity stake as well as for the purchase of seven retirement villages from Lend Lease, but not for the sale of the management agreement or the issue of new shares to Lend Lease.

Prime argues that not requiring shareholder approvals for all of these proposals constitutes a “frustrating action” with regard to its competing bid, which it made on 4 September, and asks that the proposals be submitted for shareholder approval.

Babcock & Brown Communities issued a statement in which it acknowledged Prime’s application to the Takeover Panel and said that it would defend against it.

The sitting panel to consider the application has not yet been appointed and no decision has been made whether proceedings will be conducted, the Australian Takeover Panel said in a statement.