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By Ilaina Jonas
NEW YORK, Jan 23 (Reuters) - Apartment owner Post Properties Inc PPS.N on Wednesday said former CEO John Williams teamed up with a Canadian pension fund in an unsolicited bid of about $2.0 billion for the company, sending its shares up 16 percent.
The offer from Williams Realty Advisors LLC and Cadim, part of pension fund Caisse de depot et placement du Quebec, of $44 to $47 a share translates into $1.97 billion to $2.1 billion, plus the assumption of debt.
The midpoint of the offer represents a 27 percent premium over the stock’s Tuesday closing price of $35.77.
Shares of the Atlanta-based apartment owner rose as high as $44.10 before closing at $41.50, up $5.73, on the New York Stock Exchange.
The deal helped lift other apartment real estate investments trusts. Apartment Investment and Management Co (AIV.N) closed up 12.2 percent, or $4.26, at $39.10. AvalonBay Communities Inc (AVB.N) rose 10.9 percent, or $9.45, to $95.83.
“While we believe a private takeout could be the best scenario for the company, we must caution that we’ve been here before,” Stifel Nicolaus analyst Rod Petrik wrote in a research note.
Post has been the subject of numerous offers over the past three or four years but has declined to sell.
“In light of the board’s decision to conduct a process and not enter into discussions with only one party, the board at this time has made no determination as to the adequacy of the Cadim/Williams proposal,” David Stockert, Post’s CEO, said in a statement.
Petrik said he would be surprised if the company accepted an offer below $50 per share. The net asset value of the properties is about $49 per share, he estimated.
On the other hand, UBS analyst Alex Goldfarb, who estimated Post’s net asset value at about $55 per share, said a counter bid would require a substantial amount of equity, unlike acquisition deals in the past, such as the $15.3 billion buyout of apartment owner Archstone-Smith.
As in the Archstone deal, Fannie Mae FNM.N and Freddie Mac FRE.N could step in to supply the financing, Goldfarb said.
Post owns 22,249 apartment units, including joint ventures and those under construction, in 62 communities. The deal comes to about $145,900 to $151,900 per existing apartment, Petrik said.
J.P. Morgan Securities Inc is acting as the company’s financial advisor. (See www.reutersrealestate.com for the new global service for real estate professionals from Reuters) (Additional reporting by Manish Gupta in Bangalore, editing by Deepak Kannan, Anil D‘Silva; Editing by Gary Hill)