DNZ offer not best for Argosy - Grant Samuel
An independent report says OnePath's offer to Argosy unitholders is better than DNZ's merger proposal
An independent report by investment advisory firm, Grant Samuel says that a $20 million offer to internalise management is best for listed Argosy unitholders.
The report says that the $20 million being sought by OnePath, owner of the external management contract, is fair and within the $19.7 million to $23.7 million fair price range.
Furthermore, Grant Samuel said that the alternative of a merger being offered by listed DNZ Property could be more expensive and likely to benefit DNZ more than Argosy unitholders.
The report said that DNZ needed to provide more details about any proposal to merge. There was a risk that a merger including a management takeover by DNZ would mean that DNZ unitholders gain the benefit of internalisation.
The Grant Samuel report said that a merger in the future may be beneficial but not until Argosy unitholders took the benefit of internalisation.
Grant Samuel also accepted the arguments of OnePath that dismissal of the external manager by the trustee would cause disruption, risks and additional costs for Argosy as an interim manager was appointed and a new manager sought. There was also the high risk of litigation from OnePath
Other disadvantages for Argosy unitholders from a DNZ merger included extinguishing available tax losses that can be carried forward against future earnings, and DNZ’s higher discount to net tangible asset backing. DNZ had the highest management expense-to-assets ratio of all the listed property entities.
Chris Hutching
Wed, 10 Aug 2011
Wed, 10 Aug 2011
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DNZ offer not best for Argosy - Grant Samuel
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