Australian Unity Office Fund (AOF) and CHAB Office Trust have terminated their scheme implementation agreement, after AOF unitholders knocked back resolutions at a scheme meeting.
Under the proposed scheme, CHAB would have acquired all the units in AOF – an ASX-listed REIT that owns a $670 million portfolio of nine office properties in Sydney, Melbourne, Adelaide, Brisbane and Canberra.
CHAB Office Trust is jointly owned by Charter Hall Group and Abacus Property Group. According to the scheme explanatory memorandum, AOF’s portfolio is consistent with the CHAB consortium’s strategic objectives of owning and managing office properties in Australian metropolitan markets.
Sixty per cent of eligible votes cast were in favour of the two resolutions but one – to amend the trust constitution – required the support of 75 per cent of votes cast.
One investor group reported to have voted against the deal was Hume Partners, an investment house backed by the Scanlan family. Hume increased its holding in October.
CHAB acquired 19.9 per cent of AOF in June and submitted an initial takeover proposal at $2.95 per AOF unit. The following month, CHAB increased the offer to $3.04 per unit.
Before the offer, AOF had never traded above $3 a unit since it was listed in June 2016.
The offer was for all cash, representing a 9.4 per cent premium to AOF’s closing price of $2.78 on 3 June, the day before the announcement of the initial proposal, and an 11.8 per cent premium to the 30-day volume-weighted average price.
The parties entered into a scheme implementation agreement on 2 September. Australian Unity Investment Real Estate Ltd, AOF’s responsible entity, recommended the offer.
The takeover process became controversial when CHAB sold its 19.9 per cent holding late in October for $2.95 per unit and then announced that it was still committed to pursuing the scheme.
ASIC made an application to the Takeovers Panel in November. It submitted that CHAB had “intervened” in the market for securities in AOF during the course of its proposed takeover “in a way that undermines the integrity of the trust scheme mechanism and the basis for the compulsory expropriation of interests in AOF that will result if the trust scheme is approved.”
It also submitted that if the scheme was approved not all unitholders in AOF would have had equal opportunity to participate in the benefits offered under the scheme, given the selective nature of the sale process undertaken to effect the divestment.
ASIC sought to have the scheme meeting adjourned, which the Takeovers Panel rejected.
Since the scheme implementation agreement was voted down at the meeting, ASIC has withdrawn its application.