Storage giant Abacus Storage King gets $2.17b sweetened offer from Ki Corporation, Public Storage

Shares in Abacus Storage King closed higher on Monday after the self-storage giant received a sweetened $2.17 billion takeover offer from a consortium led by South African tycoon Nathan Kirsh.

Mr Kirsh — who already holds a 59 per cent stake in the real estate investment trust through his family office Ki Corporation — and New York-listed Public Storage first lobbed a proposal in April, valuing the target at $1.93b.

But the $1.47-a-share bid was rejected the following month, with Abacus Storage King saying it undervalued the company.

At the time, the buyout partners said they were offering certainty, liquidity and an attractive premium to minority security holders and were uniquely positioned to deliver compelling value and the best long-term outcome for employees, customers and additional stakeholders.

Abacus Storage King on Monday said the consortium had now come back with an improved offer priced at $1.65 a share — a 15 per cent increase on the original bid.

However, this was still almost 5 per cent lower than a previous independent valuation review that showed its portfolio of about 200 self-storage spaces was worth $1.73 a share.

The sweetened bid sent shares in Abacus Storage King closing up almost 6 per cent to $1.56.

The business owns and manages 201 self-storage spaces across Australia and New Zealand, making it one of the industry’s biggest players.

The Kirsh-led consortium’s offer comes as Abacus Storage King’s local rival National Storage recently upped its stake in the takeover target to 9.51 per cent — a strategic move that appears designed to block the proposal.

National Storage first acquired a 4.78 per cent stake in April.

Abacus Storage King on Monday said the independent board committee had considered the revised proposal together with its adviser, Macquarie, and intends to provide a six-week period of due diligence to the consortium.

The revised offer is subject to a number of conditions, including regulatory approvals from the Foreign Investment Review Board and the New Zealand Overseas Investment Office.

“At present there is no certainty that the parties will be able to agree terms to implement the revised proposal or that, even if terms are agreed, the conditions to the revised proposal will be satisfied or waived,” Abacus Storage King said.

Analysts at Citi said while the new offer was stronger than the previous one, “there remains risk on execution from acceptance of minority shareholders”.

“In our view, a further revised offer above NTA per share may be necessary to convince minority shareholders to agree to the deal with anticipated cap rate compression and compelling Australian self-storage fundamentals,” they said.