Hotel Property Investments board unanimously rejects Charter Hall – Hostplus takeover bid

The board of Hotel Property Investments (ASX: HPI) has been quick to reject a $717.5 million off-market joint takeover bid by Charter Hall Retail REIT (ASX: CQR) and industry super fund Hostplus.

Under the terms of the bid, Charter – which already controls a 14.8% stake in Hotel Property Investments with Charter Hall Group (ASX: CHC) – and Hostplus proposed to acquire all shares in the pubs group for $3.65 each, representing an 11.6% premium to the group’s closing price of $3.27 on 27 March and a 7.3% premium to the 30-day volume-weighted average price of $3.40.

The bidders had proposed to each contribute 50% of the cash consideration to indirectly share equal ownership of the acquired entity upon completion of the transaction.

Board unanimous

After considering the unsolicited and conditional offer, the board of Hotel Property Investments unanimously rejected the deal, claiming it is not compelling enough and undervalues the company.

Among the key sticking points is that the bid is pitched at a 10% discount to the value of the group’s net tangible assets at the end of June this year.

“We believe that Hotel Property Investments’ existing portfolio and current strategy, including its organic growth initiatives, offer significantly greater value to securityholders than this proposal,” the board said.

“We remain committed to maximising value for all securityholders and will continue to evaluate all strategic options in that context.”

Fully-leased portfolio

Hotel Property Investments has a $1.2 billion portfolio of fully-leased pub assets across Australia, with strong investment fundamentals providing forecast distribution growth of 2.6% in the 2025 financial year.

Charter Hall said the proposed transaction represented a strategic opportunity to acquire an interest in a suite of net lease retail assets that are complementary to its own portfolio.

“This will facilitate our growth and diversification with the addition of a significant portfolio benefiting from a secure and growing income stream in an attractive sector,” the company said.

The company said the takeover offer would give Hotel Property Investments shareholders an opportunity to access liquidity at an attractive premium without the need to pay brokerage fees, at a guaranteed value via an all-cash consideration.