‘Substantially undervalued’: Ingenia rejects new Warburg bid tied to Perth Peet deal

Ingenia Communities has rejected a US private equity giant’s sweetened $2 billion takeover offer, saying the revised terms still “substantially undervalues” the group.

Ingenia on Monday rejected Warburg Pincus’ revised non-binding indicative $5.05-a-security cash proposal. The revised offer follows an earlier proposal from Warburg at a price of $4.75 a share.

The new offer is subject to various terms and conditions, including Ingenia walking away from its agreed acquisition of Perth developer Peet.

“The Ingenia board has determined that, despite the terms being improved from the initial proposal, the revised indicative proposal substantially undervalues Ingenia and is not in the best interests of its securityholders,” Ingenia said on Monday.

“The Ingenia board remains open to considering proposals that represent compelling value and are considered to be in the best interests of securityholders.”

Ingenia unveiled the Peet deal on August 26 after takeover talks became public in July. Peet’s board unanimously backed the cash-and-scrip proposal, which valued the company at about $2.12 a share before its 6.5¢ final dividend.

The transaction is not yet final, with competition approval still required ahead of a targeted completion in late December.

Warburg has not explained why walking away from Peet was a condition of its proposal.

Peet would give Ingenia control of more than 26,000 lots across more than 40 projects nationally, vastly expanding the land available to feed its development business.

Ingenia believes between 5000 and 7000 Peet lots could eventually be converted into land-lease communities, where residents own their homes but rent the ground underneath. It values that opportunity at about $1b once developed.

The attraction fits Ingenia’s existing business, which is heavily exposed to land-lease communities pitched largely at older Australians, alongside holiday parks.