AVJennings to be gobbled up by US private equity giant Proprium Capital Partners in $369m deal

Shares in property developer AVJennings have jumped after it agreed to be gobbled up by global private equity player Proprium Capital Partners and its local subsidiary.

Under the deal announced on Tuesday, Proprium and its local housing business AVID will acquire all AVJennings shares for 65.6¢, valuing the company at $369 million.

AVJennings said the offer was reduced from the previous bid of 67¢ a share, or $374m, following extensive due diligence over the past four months.

But it said it was still a 98.5 per cent premium to its closing price of 33¢ on November 27, the day before Proprium lobbed the original offer.

The news sent shares up, closing up 8.3 per cent at 66¢.

The company — majority owned by Singaporean property developer SC Global — said it had also ended discussions with Singapore-listed developer and investor Ho Bee Land, which offered to acquire AVJennings’ shares at 70¢ a piece earlier this year.

AV Jennings said Proprium’s 65.6¢-a-share offer would give shareholders certainty of value at a substantial premium to its undisturbed trading levels, historical trading benchmarks and precedent Australian real estate transactions.

“AVJennings confirms that no binding proposal has been received from Ho Bee Land and it has terminated all discussions with Ho Bee Land,” AVJennings said in a statement on Tuesday.

“Given a binding proposal from Ho Bee Land has not been forthcoming and following careful consideration of the revised AVID proposal, the AVJ board determined to formally agree the scheme with AVID.”

AVID chair Anthony Kingsley said it believed its offer represented attractive value for AVJennings shareholders.

The deal comes amid signs of a recovery in the housing market as lower interest rates and falling costs are expected to help stimulate growth.

Last financial year nearly 3000 construction companies went into insolvency, hit by skilled labour shortages and rising raw material costs at one end, while trapped in fixed-price contracts on the customer side.

AVJennings is run by former Wallaby Phil Kearns and sits on a pipeline of nearly 10,000 lots across NSW, Queensland, Victoria, South Australia and New Zealand.

That puts it in the lower mid-tier range in terms of the developer market, behind the biggest player Stockland which has more than 80,000 development sites.

AVJennings board of directors unanimously recommend shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to an independent expert concluding it’s in the best interest of investors.

The company had appointed Kroll Australia as the independent expert to prepare a report on the scheme.

The report and details of the scheme meeting is expected to be provided to shareholders next month.