* Stockland proposes share offer to take over Australand
* Offer at A$4.20 per Australand share, values company at
* Australand board rejects proposal, says not compelling
* Stockland says may sell current holding after rejection
(Adds Stockland comment, investor comment)
By Maggie Lu Yueyang
SYDNEY, April 23 Australia's Australand Property
Group said on Wednesday it had rejected as undervalued
a A$1.95 billion ($1.83 billion) proposal from bigger rival
Stockland Group to increase its stake, thwarting
Stockland's move to expand its residential business.
Australand has been seen as a takeover target since
Singapore's CapitaLand Ltd said it wanted to sell what
was a 59 percent stake in early 2013, while Stockland has been
seen as a likely buyer to cement its position as one of
Australia's biggest property companies.
The Australand board said the proposal, which offered 1.111
Stockland shares for every Australand share that Stockland does
not already own, was not compelling and had not provided
"sufficient consideration to Australand securityholders in the
context of a change of control".
The board also decided to deny Stockland access to due
diligence, and recommended Australand shareholders take no
action at the moment.
The proposal, which implies an offer price of A$4.20 for
each Australand share, also represented a discount to its
stock's closing price on Tuesday, Australand said. The Stockland
offer values Australand at A$2.43 billion.
Australand shares slipped 0.1 percent to A$4.28 at 0336 GMT,
while Stockland fell 0.4 percent, against a 0.5 percent rise in
the broader market.
"It will be a great unknown in terms of what price will be
favourable. They've got attractive assets," said Grant Berry,
portfolio manager at Melbourne-based SG Hiscock & Co Ltd that
owns both Australand and Stockland.
This is the second takeover proposal that Australand has
rejected in the past two years. The company turned down an
unsolicited approach from bigger peer GPT Group in
December 2012, saying it did not provide a sufficient premium.
Stockland said its bid represented an 18 percent premium to
Australand's stated net tangible assets per share. It said the
deal had "compelling strategic merit".
Australia's residential market has been boosted by record
low interest rates over the past year, with home prices up 11
percent across the country and 15 percent for Sydney.
"If investor price expectations are too high, we will sell
and realise a profit," Stockland's Managing Director and Chief
Executive Mark Steinert said in a statement. Stockland bought a
19.9 percent stake in Australand in March.
Australand was advised by Fort Street Advisers, Macquarie
Capital and King & Wood Mallesons, while Stockland has engaged
Citigroup, Merrill Lynch and UBS.
($1 = 1.0677 Australian Dollars)
(Reporting by Maggie Lu Yueyang; Editing by Paul Tait and Miral