McGrath receives takeover offer from global property giant Knight Frank and Bayleys

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By Imelda Cotton - 
McGrath ASX MEA Knight Frank Bayleys takeover bid

Australian property agency McGrath (ASX: MEA) has confirmed it has received a takeover offer from a consortium of global property giant Knight Frank Australia and New Zealand’s Bayley Corporation via a scheme of arrangement.

The proposed acquisition is expected to give Knight Frank a leading position in the nation’s residential and commercial real estate circles and create a full service capability to support and advise clients.

Under the terms of the deal, McGrath shareholders will have the option to receive $0.60 cash per McGrath share or an unlisted scrip alternative, or a combination of both.

The scrip will allow shareholders to retain an interest in McGrath if the transaction is completed.

Equity value

The all-cash option will be the default consideration and pins McGrath’s equity value at approximately $95.5 million.

It represents a premium of 25.8% to the three-month volume weighted average price (VWAP) of $0.48 and 52.5% to the 12-month VWAP of $0.39.

McGrath shareholders will also be entitled to a permitted dividend prior to implementation of the scheme which will not reduce the scheme consideration.

McGrath has appointed Yatsen Associates and Monash Advisory as financial advisers for the proposed takeover and Herbert Smith Freehills as legal adviser.

McGrath will be delisted from the ASX if the deal goes through.

CEO intentions

McGrath founder and chief executive officer John McGrath has confirmed his intention to receive the unlisted scrip alternative for his shareholding, which equates to approximately 23.3% of the company.

Should the transaction go ahead, Mr McGrath will continue in the role supported by his current management team.

“We are delighted to have received this offer from a consortium comprising a leading global property firm in Knight Frank, which has a strong residential real estate offering throughout the world, and [a] leading New Zealand full-service real estate agency in Bayleys,” he said.

“We see the potential partnership with McGrath as a positive development for our industry and for our agents, team members, franchise partners and customers, who will all benefit from the consortium’s global networks, access to high net worth clients and real estate expertise in support of our vision and growth plans.”

Vote in favour recommended

The board members of McGrath — who currently hold approximately 48.1% of the total issued capital — have recommended shareholders vote in favour of the proposal, adding that it is “fair and reasonable”.

Chair Peter Lewis said the board was acting in the best interests of shareholders.

“This scheme represents an excellent outcome for McGrath shareholders, our customers, agents and staff and is at a significant premium to historical trading prices, offering certainty of value and the opportunity to realise an investment in full for cash,” he said.

“It is pleasing to see that Knight Frank and Bayleys share a similar business ethos and approach to McGrath and I see this as a positive development for the senior management and team members who will continue to be led by John McGrath.”