GPT, Lend Lease Still Talking

SYDNEY-In the wake of General Property Trust’s rejection of Lend Lease Corp.’s increased offer, Lend Lease Managing Director and CEO Greg Clarke Lend Lease says his company understands the benefits of a merger with GPT but won’t give up too much to make it happen. “We see great merit in the merger with GPT, but not at any price,” he said in a prepared statement released Tuesday.GPT this week rejected the latest Lend Lease offer, which raised the total value of the consideration by 10 cents to A3.56 a GPT unit. GPT independent directors said there were still multiple issues to be resolved before they would approve the offer, which is a combination of cash and scrip. GPT’s issues include concerns regarding the higher risk associated with Lend Lease’s development and construction arm and adequate compensation for GPT’s relatively secure, high-quality property portfolio.Sydney-based Lend Lease, which manages GPT, wants to buy the trust to ensure the future of its management fees. Lend Lease earned A280 million in 2003 from managing General Property’s A7.7-billion portfolio of hotels, office buildings and shopping malls. Lend Lease’s offer is based on a stapling of Lend Lease Shares and GPT units. The latest offer decreased the ratio of Lend Lease Shares for GPT units from 1:3.8 to 1:3.9 but raised the one-time cash distribution to GPT unitholders from 47 cents per unit to 64 cents per unit. Lend Lease says it received a counteroffer from GPT, but was “not prepared to meet those terms.”The A3.56 per unit offer by Lend Lease is a 17% premium to GPT’s trading price immediately prior to the original merger proposal. Property trust analysts have said that A3.30 per unit is a full valuation of GPT, but that Lend Lease would have to offer more of a premium than it has to gain control of the company. Concurrently, they say that while Lend Lease may up its offer again, it won’t likely put more cash on the table.Meanwhile, the posturing continues, with Lend Lease saying its proposal remains the only on one available to be acted upon by GPT unitholders, and GPT independent directors saying they are now considering another proposal that would internalize management of the GPT portfolio.Analysts expect the two sides to meet again and continue negotiating. At last trade, Lend Lease shares stood at A10.33, off 2.36% (25 cents) from its previous close of $10.58. Shares of GPT were trading off 3 cents at A3.50.