SYDNEY Australia's Stockland Corporation Ltd (SGP.AX) said on Wednesday it bought a 19.9 percent stake in smaller rival Australand Property Group ALZ.AX, laying the foundation for a possible A$11 billion ($10.05 billion) property giant.
A full takeover of Australand would cement Stockland's position as one of Australia's largest property companies, adding A$2.2 billion to its current A$8.9 million market capitalization.
Stockland confirmed the acquisition as Singapore's CapitaLand Ltd (CATL.SI) said it sold its remaining 39.1 percent stake in Australand for about $849 million.
Australand has been seen as a takeover target since CapitaLand said it wanted to sell what was a 59 percent stake in early 2013. Stockland has been seen as a likely buyer of some or all of the business.
"They'll probably go for the whole thing," said one property analyst who asked not to be named because he was not authorized to comment publicly.
Stockland said it bought the stake for an average of A$3.78 per stapled security, amounting to about A$435 million.
"Over time this holding will enable us to explore strategic opportunities with Australand," Stockland CEO and Managing Director Mark Steinert said in a statement.
Asked if this was a reference to a further acquisition of Australand stock, a Stockland spokesman declined to comment.
CapitaLand said it sold the stake to simplify its structure and redeploy the funds in Singapore and China.
Last year CapitaLand cut its stake in Australand to 39.1 percent from 59.1 percent at a loss to pursue new opportunities, even though an earlier strategic review had concluded Australand was a key investment.
Australand securities were placed on a trading halt on Wednesday. Stockland shares were 2.3 percent lower at A$3.76 in a flat overall market.
($1 = 1.0950 Australian Dollars)
(Additional reporting by Lincoln Feast; Editing by Richard Pullin and Stephen Coates)