A crucial voter in Blackstone's bid to take Croesus Retail Trust private has raised its stake in the Japan-based retail business trust - but remains undecided on whether to tender its units to Blackstone.
GKG Investment Holdings (GKGI), which holds the single largest stake in Croesus, scooped up about nine million units for close to $10.6 million at an average price of $1.177 per unit on Wednesday, filings to the Singapore Exchange on Thursday showed.
On Wednesday, private equity firm Blackstone made a cash offer to buy out Croesus at $1.17 per unit via a scheme of arrangement, also known as an "all-or-nothing" deal.
Mr Goh Yew Lin, managing director of G.K. Goh Holdings, which controls GKGI, told The Straits Times yesterday: "We haven't decided whether to accept. We invested in Croesus because it has an excellent portfolio of assets in Japan, and the trust was for a long time trading at an exceptionally attractive yield.
"Although Blackstone's bid is at a premium to the undisturbed price, they're very smart investors who clearly expect further upside by buying at these levels. We'll wait to see what the independent advisers recommend before making a final decision," he added.
"Meanwhile, if the bid price is revised upwards, or if someone else comes along with a higher bid, we wouldn't be unhappy. Even without that, the price differential from $1.177 to an effective bid price of $1.21 should give us a decent return over a three-month holding period."
Croesus units fell by half a cent or 0.42 per cent to finish at $1.18 yesterday. The market seems to be pricing in a premium to Blackstone's $1.17 per unit cash offer. But this actually works out to as much as $1.21 per unit, if a four-cent September dividend is priced in. Blackstone had said that unit holders who accept its offer will not be denied Croesus' September distribution of up to 4.06 cents per unit.
If competing offers do emerge, or if steps are taken by any party to block the scheme, Blackstone can use a "switch option" to proceed with its acquisition by way of a general cash offer at the same or better terms to the scheme.
GKGI would also be able to play kingmaker with its stake now at 6.39 per cent. Mr Goh's own stake is 7.11 per cent, through deemed interests in GKGI and his spouse. He said he does not know of any rival bidders now, but "one can always hope".
"Good assets with decent yields are not easy to come by, and perhaps this will draw the attention of another potential acquirer," said Mr Goh.
Separately, Croesus Retail Asset Management, which manages Croesus Retail Trust, said on Thursday it had offloaded its entire 0.62 per cent stake in the trust for $5.6 million, fetching $1.18 for each unit.
These were units issued to the trust manager earlier this year as part of its management fees.
Also on Thursday, the brother of Croesus executive director Jeremy Yong picked up 200,000 units at $1.18 each, lifting his holdings in Croesus to 0.25 per cent.
Croesus will appoint an independent adviser to study Blackstone's offer. Its recommendations will be laid out to unit holders in the scheme document.