A-HTrust units tumble as takeover fizzles out

Investor hopes dashed as stapled group says talks with potential buyers stopped

Ascendas Hospitality Trust units (A-HTrust) fell sharply yesterday as investors betting on a sweet takeover offer had their hopes dashed.

The units dived l0.46 per cent, or eight cents, to close at 68.5 cents, with 18.5 million units changing hands.

A-HTrust had said on Tuesday night that it had ceased all discussions with potential buyers and decided not to proceed with the sale of all its stapled securities.

The decision came more than three months after the managers announced on Dec 23 that they were "reviewing certain strategic options" for the trust, after receiving an "unsolicited expression of interest" for the possible acquisition of all its units.

In three subsequent filings to the Singapore Exchange, with the last dated March 23, A-HTrust's managers told unitholders that they were still in the process of evaluating the proposals.

Blackstone Group, Gaw Capital Partners and a group led by Varde Partners planned to submit final bids for A-HTrust, media reports had said.

Yesterday's sell-off more than erased the gains made since Dec 23 last year, when A-HTrust closed at 73 cents. The units surged to a high of 81 cents on Feb 10 but are now down 6.16 per cent, or 4.5 cents, from Dec 23.

DBS analyst Mervin Song has downgraded A-HTrust from "buy" to "hold".

He said: "With the unwinding of positions by investors who had anticipated a successful takeover, we expect A-HTrust's share price to be under pressure in the near term."

A-HTrust did not explain why it rejected the takeover bids, but Mr Song suspects it may have been due to the bidders not offering a price on a par with or at a significant premium to A-HTrust's pro forma updated net asset value per unit of 84.2 cents announced last week.

This was up from a valuation of 70.3 cents announced previously.

A-HTrust is a stapled group comprising Ascendas Hospitality Business Trust and Ascendas Hospitality Real Estate Investment Trust, with a portfolio of 11 hotel across Australia, New Zealand, China, Japan and Singapore.

A version of this article appeared in the print edition of The Straits Times on April 07, 2016, with the headline 'A-HTrust units tumble as takeover fizzles out'. Subscribe