IMMOFINANZ: CPI offer price too low | Update: IMMOFINANZ welcomes announced increase, but offer price still too low

Mihai-Alexandru Cristea 26/01/2022 | 15:16

Update January 28: The Executive Board of IMMOFINANZ welcomes the announcement by CPI Property Group S.A. (CPIPG) to increase the offer price for IMMOFINANZ shares from the current level of EUR 21.2 (cum dividend) to EUR 22.7 (cum dividend). This price is, however, still clearly below the current value of the company and does not reflect IMMOFINANZ’s substantial growth potential. Moreover, the higher price fails to include an appropriate control premium for CPIPG’s announced intention to attain control over IMMOFINANZ. The Executive Board also refers to its statement from 26 January 2022 on the anticipatory mandatory offer by CPIPG and again recommends that investors not accept the announced improved offer by CPIPG for IMMOFINANZ’s shares and convertible bonds.

The Executive Board of IMMOFINANZ welcomes the announcement by CPI Property Group S.A. (CPIPG) to increase the offer price for IMMOFINANZ shares from the current level of EUR 21.2 (cum dividend) to EUR 22.7 (cum dividend). This price is, however, still clearly below the current value of the company and does not reflect IMMOFINANZ’s substantial growth potential. Moreover, the higher price fails to include an appropriate control premium for CPIPG’s announced intention to attain control over IMMOFINANZ. The Executive Board also refers to its statement from 26 January 2022 on the anticipatory mandatory offer by CPIPG and again recommends that investors not accept the announced improved offer by CPIPG for IMMOFINANZ’s shares and convertible bonds.

CPIPG announced on 26 January 2022 that it had signed a conditional purchase contract to acquire 9,413,253 IMMOFINANZ shares, representing approximately 6.81% of the current share capital of IMMOFINANZ. The purchase price per share equals EUR 22.70 cum dividend. As a consequence of this conditional package purchase of IMMOFINANZ shares, CPIPG announced that it will increase its offer price for IMMOFINANZ’s shares and convertible bonds in accordance with the agreed purchase price and in agreement with the Austrian Takeover Act.

On this basis, CPIPG holds (directly and indirectly) a total of 26,621,030 IMMOFINANZ shares as of 26 January 2022, which represents a holding of approximately 19.25%. An additional 22,442,408 IMMOFINANZ shares, which represent an investment of approximately 16,23%, are conditionally contracted. That represents a total investment of 49,063,438 IMMOFINANZ shares, i.e. an investment of approximately 35.49% in the share capital of IMMOFINANZ.

 

Original story

The Executive Board and Supervisory Board welcome the intention of the CPI Property Group (CPIPG) to benefit from the company’s attractive growth potential and support the development and expansion of IMMOFINANZ as a long-term major shareholder. However, the price offered by CPIPG for the IMMOFINANZ share is significantly lower than the current value of the company and does not reflect IMMOFINANZ’s substantial growth potential. The price also fails to include an appropriate control premium for CPIPG’s announced intention to attain control over IMMOFINANZ. The Executive Board, Supervisory Board and Works Council of IMMOFINANZ today issued statements in which they indicate that the offer price of EUR 21.20 per share is viewed as not attractive and recommend that investors not accept the offer by CPIPG for IMMOFINANZ’s shares and convertible bonds.

 

The offer price of EUR 21.20 (cum dividend for the 2021 financial year) specified by CPIPG in its anticipatory mandatory offer represents a discount to the reference values used to determine a fair value for the IMMOFINANZ share. The discount of roughly 28% places the offer price clearly below the current (diluted) EPRA NTA per share of EUR 29.45[1]. A comparison with other key valuation benchmarks, e.g. EPRA NAV per share or the IFRS book value per share, also shows high discounts. The offer price does not include any premium to the uninfluenced closing price on 2 December 2021, the day before the announcement of the intention to make a takeover offer. Comparable transactions in the European real estate sector normally include a premium of roughly 24% over the uninfluenced closing price. Additionally, the offer price is 6.4% below the current price of the IMMOFINANZ share on 24 January 2022. The offer price is also significantly below the price of the IMMOFINANZ share before the outbreak of the COVID-19 pandemic (nearly EUR 27 in February 2020) and the analysts’ average target price of EUR 24.50 (median). Therefore, the price does not include an appropriate control premium for CPIPG’s announced intention to attain control over IMMOFINANZ.

 

IMMOFINANZ on a growth course

Moreover, the offer price does not sufficiently reflect IMMOFINANZ’s outstanding performance in 2021 or the potential of its value-creating strategy. Successful crisis management and a solid financing structure with an investment grade rating have formed the basis for top performance and a fast-tracked growth course. IMMOFINANZ generated the best results in the past 10 years during the first three quarters of 2021 despite the ongoing negative effects of the COVID-19 pandemic: The results of operations (+60% to EUR 180.4 million) and net profit (EUR 295.7 million after EUR -98.3 million) increased substantially and even topped the very good pre-crisis level.

IMMOFINANZ intends to continue this success course. Plans for 2022 call for further strengthening the market positions of STOP SHOP (the largest retail park operator in Europe) and myhive (innovative and flexible office solutions) as well as the expansion of the property portfolio from the current level of EUR 5.0 billion to roughly EUR 6.0 billion. Entry into the market for sustainable and affordable housing (TOP on STOP) will create additional earnings opportunities and increase diversification. IMMOFINANZ expects an increase in pre-tax FFO 1 to over EUR 135 million in 2022, whereby roughly 70% will be distributed as dividends to the company’s shareholders.

According to the offer document, CPIPG expects a high degree of control and the ability to substantially influence future strategic measures by IMMOFINANZ in close cooperation with management and other stakeholders to the benefit of IMMOFINANZ. The acquisition of an investment by CPIPG can have a positive effect on the economic development of IMMOFINANZ and also support the realisation of its sustainable growth targets. The attainment of control can, however, make it possible for CPIPG to significantly influence and change IMMOFINANZ’s strategy and business policies, which could also lead to results that differ from management’s guidance.

 

IMMOFINANZ will be emission-free by 2040

As part of its growth strategy, IMMOFINANZ will also actively drive the fight against climate change in the real estate branch. The company’s Net Zero Emission Strategy requires a 60% reduction of all greenhouse gases below the 2019 level by 2030 and the end of emissions along the entire value chain by 2040. That means IMMOFINANZ, as one of the leading European commercial property companies, will clearly exceed the goal set by the European Union to become climate neutral by 2050. This pioneering role will, moreover, substantially strengthen IMMOFINANZ’s competitive position due to the massive increase in the market demand for sustainability-oriented investments.

Executive Board members Dietmar Reindl and Stefan Schönauer“The entry of the CPI Property Group, one of the leading commercial property companies in Central Europe, is further proof of our company’s high attractiveness and great growth opportunities. However, these positive future perspectives are contrasted by an offer price that does not reflect the current value of the company, our strong performance during the 2021 financial year or the earnings and growth opportunities created by our value-creating expansion strategy. We therefore recommend that our shareholders and convertible bondholders not accept the offer from the CPI Property Group and, together, realise the great potential inherent in IMMOFINANZ.“

BR Magazine | Latest Issue

Download PDF or read online: April 2022 Issue | Business Review Magazine

The April 2022 issue of Business Review Magazine is now available in digital format, featuring the main cover story titled “Building A Strong And Sustainable Real Estate Business In
Mihai-Alexandru Cristea | 20/04/2022 | 13:29

You will receive a download link for the latest issue of Business Review Magazine in PDF format, based on the completion of the form below.

I agree with the Privacy policy of business-review.eu
I agree with the storage and handling of my data by business-review.eu

Close ×

We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

Accept & continue