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Nov 28 (Reuters) - Hong Kong-based PAG’s bid to buy Spring Real Estate Investment Trust fell through on Wednesday after it failed to secure the required acceptances from the realty firm’s unitholders.
Spring REIT’s shares opened 12.7 percent lower on Thursday morning, at HK$3.36, following the announcement after market close on Wednesday.
In September, RE Strategic Investments, a unit of private equity firm PAG, launched an unsolicited bid for Spring REIT, and in October raised it to HK$5.30 per unit, or HK$6.73 billion ($859.93 million). The sweetened offer sent the REIT’s shares to an all-time high of HK$4.60.
PAG said on Wednesday that the acceptances it had received combined with its own affiliate’s stakes accounted for 41.5 percent of unitholders, below the 50 percent level required.
PAG currently has a 13.88 percent stake in Spring REIT, according to Refinitiv data.
While launching its bid, PAG said it wished to replace Spring REIT’s existing manager, conduct a strategic review, and that it opposed the REIT’s management’s plan to acquire a shopping mall in Huizhou, in China’s Guangdong province across the border from Hong Kong.
“We are pleased that this process has come to a conclusion, allowing us to return our full attention to managing Spring REIT,” said Toshihiro Toyoshima, Chairman of Spring Asset Management Ltd, in a statement late on Wednesday.
This is not the first time that PAG has clashed with Spring REIT’s management. Last year, the private equity firm attempted to have the REIT’s manager, Spring Asset Management Ltd, removed from its position, but the proposal was rejected at an EGM.
“PAG is not going anywhere.... In our opinion, the manager’s actions thus far continue to demonstrate questionable governance and decision-making practices, to the detriment of independent unitholders,” said PAG Real Estate Partner Broderick Storie in a statement.
$1 = 7.8262 Hong Kong dollars Reporting by Nikhil Kurian Nainan in Bengaluru and Alun John in Hong Kong; Editing by Anil D'Silva and Sunil Nair