Abacus Storage King, a prominent player in the self-storage sector, has received an enhanced takeover offer valued at $2.17 billion from a consortium led by South African businessman Nathan Kirsh and Public Storage, a New York-listed company. The new bid was announced on Monday and is seen as a significant increase from an earlier proposal of $1.93 billion made in April.
Initially, the consortium’s offer of $1.47 per share was rejected by Abacus Storage King, which argued that the bid did not reflect the true value of the company. The company emphasized the need for an offer that would provide certainty, liquidity, and an appealing premium for minority shareholders. In response, the consortium has increased its offer to $1.65 per share, representing a 15 percent improvement over the initial bid. Despite this increase, the latest offer remains approximately 5 percent below an independent valuation that assessed the company’s worth at $1.73 per share.
Market Response and Strategic Moves
Following the announcement of the sweetened offer, shares in Abacus Storage King rose by nearly 6 percent, closing at $1.56. The company manages a network of 206 self-storage facilities across Australia and New Zealand, making it one of the largest entities in the industry. Its portfolio includes 68 locations in New South Wales, 44 in Queensland, 42 in Victoria, and 17 in Western Australia, along with 24 sites in New Zealand.
The revised offer comes amid strategic maneuvers from local competitor National Storage, which has increased its stake in Abacus Storage King to 9.51 percent. This move appears to be a tactic aimed at thwarting the takeover bid. National Storage first acquired a 4.78 percent stake in April, reflecting its intention to influence the outcome of the acquisition process.
Abacus Storage King stated that its independent board committee is currently reviewing the revised proposal alongside its adviser, Macquarie. The committee plans to provide a six-week period for due diligence by the consortium. The new offer is contingent upon several conditions, including necessary regulatory approvals from the Foreign Investment Review Board in Australia and the New Zealand Overseas Investment Office.
Future Considerations and Market Implications
The company has cautioned that there is no guarantee that the parties involved will reach an agreement on the terms of the revised proposal. Furthermore, even if an agreement is reached, it remains uncertain whether the required conditions will be fulfilled or waived.
Analysts at Citi have noted that while the latest offer is an improvement over the previous one, there are execution risks associated with gaining acceptance from minority shareholders. They suggest that a further revised offer exceeding the net tangible asset (NTA) value per share might be necessary to persuade minority shareholders to support the deal, especially given the anticipated tightening of cap rates and strong fundamentals in the Australian self-storage market.
As the situation unfolds, stakeholders will be closely monitoring developments regarding the potential acquisition, which could significantly reshape the landscape of the self-storage industry in the region.
