Custodian is confident it will complete its merger with Abrdn Property Income Reit, despite interest from a rival real estate investment trust.
Fund manager of the Custodian Property Income Reit, Richard Shepherd-Cross, told FT Adviser the last minute offer, which saw a planned shareholder meeting postponed, would not affect the firm’s overall timetable.
Last week, the £260mn Abrdn fund cancelled a shareholder vote on the proposed takeover to consider a rival offer from Urban Logistics SHED Reit.
Shepherd-Cross said: “A huge amount of thinking and work was done in order to mutually agree that a merger of the two companies was in shareholders best interest.
“I'm sure as part of that, although we weren't part of it, there were considerations of whether there was anyone else out there in the market who might be interested.”
Custodian first approached API in June last year, according to Shepherd-Cross, and both firms carried out due diligence in October before a formal announcement was made in January.
At this point the shareholder vote was scheduled for February 28.
The fund manager added: “We were bowling along quite happily, everyone comfortable in the knowledge that this was a positive transaction.
“And then we received the news that Urban Logistics Reit intended to make an offer, this was sort of five to midnight.
“It is important to remember that the deal that we had agreed has been recommended to the board of shareholders and that is still the case. There has not yet been another bid.”
Despite the setback, Custodian remains confident in its proposals.
Shepherd-Cross said: “We are absolutely committed to this bid, it is a property-first transaction and there's also absolute strategic alignment.”
He said combining the two trusts would result in a diversified portfolio with a mix of larger and smaller assets.
He added: “Putting myself in the shoes of the board of API, they have still recommended to their shareholders a merger with Custodian.
“But when someone comes knocking on the door saying they have another offer, it would be quite a brave board just to say, ‘yeah, we're not interested’.
“They at least had to give it a couple of weeks of airtime and while they have postponed the general meeting, the overall timetable for completion and indeed the recommendation to complete a merger with us hasn't changed.”
After the rival offer was made, two major shareholders, Brooks Macdonald Asset Management and Wise Funds Limited, withdrew their intent to vote for the Custodian deal, representing 4.5 per cent of the share capital.
Shepherd-Cross said he read this decision as the two shareholders taking time to consider the options.
He added: “Some people will read into it you know, any number of things, but I think, actually, if you put yourself in the shoes of any of the players in this particular drama, people have just acted rationally, to new information.
