Eureka’s new investor Ben Cottle opposes Aspen deal

A new campaign by the board of Gold Coast-based seniors rental accommodation provider Eureka Group (ASX:EGH) to block its scrip-based acquisition from Aspen Group (ASX:APZ) The company became active today after Filetron, a substantial shareholder, announced its resistance. For trading.

Filetron, owned by Ben Cottle, founder of state-owned property management company FDC, acquired a 9.62% stake in Eureka earlier this month and has steadily increased its stake since then, bringing its current holdings to 19.29%. There is.

Late last week, when Kotor’s stake had already reached 15.97%, Eureka criticized what it saw as “misleading statements and material omissions” in Aspen’s bidder statement for the company.

Aspen is offering 0.26 of its own shares for each Eureka share, and the company claims the target price is $166 million, based on an audited net asset value of $2.01 per APZ share.

But APZ stock hasn’t traded anywhere close to that in over a year, and is currently trading at $1.75, a level that would value Eureka at $137.7 million if the deal were to close today.

Eureka’s market capitalization now stands at nearly $160 million, and the board has asked shareholders to reject Aspen’s proposed acquisition on the grounds that it is “improper and materially undervalues ​​Eureka.” ing.

Target maintains that a takeover is unlikely to occur because Filetron is opposed to the deal.

In a statement to the ASX, the company said: “The board would like to welcome Filetron as a new major shareholder and plans for Filetron to be a long-term investor and participate in Eureka’s future growth. I will keep in mind that I am looking forward to it.”

“Based on Filetron’s statements, Aspen will not be able to achieve the 90 percent threshold required to compulsorily acquire all other Eureka shares not held by Aspen.

“Accordingly, many of the purported benefits of the merger outlined in the bidders’ statements, including estimated synergies, revenue growth and the combined balance sheet, will not be realized.”

Eureka adds that share-to-share rollover relief is only available if Aspen becomes the owner of at least 80 percent of the shares, but considering Filetron’s nearly 20 percent holding, that is a possibility. The sex is said to be low.

“This means that if a Eureka shareholder who has obtained a capital gain on the disposal of Eureka shares accepts the offer and the offer becomes unconditional, even though he has not received any cash consideration under the offer, the capital gain will be This means that there may be a potential tax liability,” the company said. he told shareholders.

“This offer represents no discount or meaningful premium to Eureka’s share price at any time during the 12 months prior to the offer; Since then, it has consistently shown a discount to Eureka’s stock price.”

Eureka Group is said to be the only pure ASX-listed provider of affordable senior rental accommodation in Australia. It manages approximately 2,900 units in 52 villages across the country. Recently acquired six seniors rental villages in Western Australia for $44 million From Ingenia Communities Group (ASX: INA).

Headquartered in Sydney, Aspen has a portfolio of 5,000 homes across residential communities, retirement villages and holiday parks.