Green Property's plans for its biggest-ever property takeover now lie in the hands of shareholders in the target company, the British group Trafford Park Estates.
Green has said that it is interested in going ahead with a £135 million-£164 million proposal to buy Trafford Park, but only if Trafford Park abandons existing plans to take over another British property group, Barlows, for £26 million sterling.
Green has asked that Trafford Park adjourn an extraordinary general meeting scheduled for tomorrow where its shareholders will vote on the Barlows takeover. There was no response yesterday from Trafford Park to Green's request that the e.g.m. be adjourned.
But in a statement earlier yesterday, Trafford Park said that it intends to go ahead with tomorrow's e.g.m. It said that the Green proposal undervalues the company and that the Barlows takeover is in the best interests of Trafford Park shareholders.
In late April, Trafford Park announced its agreed merger with the much smaller Barlows. The Manchester-based Trafford Park announced yesterday that it has subsequently received an approach from Green which values Trafford Park shares at 185p sterling each in cash and 205p each in Green shares.
It is understood that Green and its advisers, Dresdner Kleinwort Benson and Davy Stockbrokers, spent much of yesterday canvassing Trafford Park's institutional shareholders on the Green proposal to secure their support for an adjournment of tomorrow's e.g.m.
Green managing director Mr Stephen Vernon said that Green first made a tentative approach to Trafford Park last November and then made a written request last January for discussions with the Manchester-based group. Subsequently Green made an approach with a view to making an offer for Trafford Park, and was told to make a final firm proposal by 6 p.m. on Tuesday.
The cash offer values Trafford Park at £127 million sterling (£135 million) while the share offer values it at £164 million. Green itself is worth £436 million at its current market price of 550p.
Mr Vernon said that the proposal would allow the British group's shareholders to accept cash, Green shares or a combination of both. On the fact that the proposal is conditional on the Barlows takeover being withdrawn, he said: "There is nothing inherently wrong with Barlows, but it is Trafford Park that we are interested in."
He added that Trafford Park's portfolio was a good match to Green's business. "These are the sort of properties we have dealt with in the UK, industrial estates and development sites." The bulk of Trafford Park's £155 million portfolio is centred in the greater Manchester area, but it also has industrial and development sites in Cambridge, Rochdale, Redditch, Bristol, Hereford and London. About £25 million of the £155 million portfolio refers to development sites.
In the year to end of June, 1997, Trafford Park reported pre-tax profits of £6.1 million sterling, a slight fall on the £7.1 million profits the previous year. A much lower tax charge meant, however, that after-tax profits rose £5 million to £6.1 million. Net asset value at the time was 167p per share, but this has risen since those 1997 results were announced. In the half-year to the end of December, pre-tax profits rose from £2.98 million to £3.18 million
The 185p sterling per share cash offer proposal is a 16 per cent premium on Trafford Park's closing price of 159p on Tuesday evening and is also a 10.7 per cent premium on the British group's net asset value of 167p per share. Trafford Park shares rose sharply by 16p to 175p, but still closed well short of the Green cash offer price of 185p. This suggests that the market is not convinced of Green's getting an adjournment of tomorrow's crucial Trafford Park e.g.m. on the takeover of Barlows.
