Ashtenne plc said it has recommended an offer for the group at 470p per share from Industrial Funds Ltd, a newly incorporated joint venture company owned by Warner Estate Holdings plc and Anglo Irish Bank Corporation plc.
The offer price comprises 330 pence in cash plus a special dividend of 140 pence per Ashtenne share, payable when the offer becomes wholly unconditional. The offer values the whole of Ashtenne at 119.2 mln stg.
Including the special dividend of 50.5 mln, the transaction represents an aggregate value for Ashtenne shareholders of approximately 169.7 mln stg.
In a separate statement issued today, Warner Estate said it is proposing a fully underwritten placing for cash of 2,547,738 new ordinary shares, representing 5 pct of its existing issued ordinary share capital, at 540 pence per share to raise gross proceeds of around 13.8 mln stg.
The proceeds will be used to part finance the recommended cash offer for Ashtenne.
Ashtenne also revealed a robust set of results for the year to Dec 31 2004 today which showed record pretax profit of 73.9 mln stg, up 132 pct on the previous year.
The property group said its net asset value at the end of the year was up 37 pct to 427 pence from 312 pence in 2003.
The cash balance at the end of December was 102 mln stg with borrowings of only 15 mln.
In view of the offer from Warner Estate Holdings announced today, the directors said they have determined that it would not be appropriate at the present time to recommend a final dividend. The board said that if the offer is not successful it will consider a further return of capital or special dividend.
Ashtenne said that, as a result of the disposals made last year, 2005 will be a very different proposition from 2004. The fund management business will continue to grow and prosper and is expected to continue to provide strong cash flow and growing profits for the company.
On the direct property side, whilst existing assets are good investments liable to increase in value, the board said it does not expect them to create significant increases in net asset value in 2005, nor lead to disposal profits of anywhere like the scale achieved in 2004.
Ashtenne said its directors unanimously recommend the offer and have undertaken to do in respect of a total of 3,986,861 Ashtenne shares, plus options over 420,000 Ashtenne shares, representing, approximately 11.2 pct.
Warner plans to keep Ashtenne's fund management business intact, headed by Ashtenne's existing staff. However, Warner intends to reduce overheads through closure of Ashtenne's head office.
Looking forward, the group said revenues from fund management activities are likely to be the largest contributor to the company's earnings, owing to the significantly reduced size of its directly owned portfolio. It is in this context that the Ashtenne board believes that there are advantages from combining Ashtenne's fund management activities with Warner's own fund management operations.