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15 November 2004
Lend Lease / GPT Merger
Lend Lease Corporation Limited (“Lend Lease”) has prepared the attached detailed analysis of the underlying value of the recommended merger of General Property Trust (“GPT”) with Lend Lease compared to the last minute proposal to make a takeover offer for GPT by Stockland Corporation Limited (“Stockland”) last week.
Some commentary in the market over the last week has suggested that on a “see through price basis” the Stockland proposal and the Lend Lease merger with GPT are “roughly equivalent”. Lend Lease believes the use of a “see through price basis” to compare the two proposals ignores the fact that under the merger of GPT with Lend Lease, a new security is created that will have different characteristics and value drivers to that of either current Lend Lease shares or GPT units.
The Lend Lease / GPT merger is not a takeover of GPT. Lend Lease shares are not the consideration for GPT unitholders in the same way as Stockland securities are the sole consideration under the Stockland proposal.
The attached analysis shows a substantial underlying value differential between the two proposals when consideration is given to the earnings multiples and asset book value multiples that have been applied to Stockland’s core residential development business compared to Lend Lease’s urban community development business, Delfin Lend Lease, which is larger, more diverse and, Lend Lease believes, higher quality than the Stockland business.
The analysis shows that if similar earnings and asset book value multiples are applied to the Stockland business as have been applied to Delfin Lend Lease by GPT’s Independent Expert, the underlying value of the Stockland proposal is reduced to under $3.00 per GPT unit compared to GPT’s Independent Expert’s latest valuation of the Lend Lease merger proposal of $3.72. Alternatively, if the multiples being applied by the market to the Stockland residential business are applied to the Delfin Lend Lease business, the underlying value of the Lend Lease / GPT merger is worth far more than the Independent Expert’s valuation, the current market price of GPT and, clearly, the Stockland proposal.
The analysis also compares the quality of the Stockland proposal to that of GPT and other fundamental measures which Lend Lease believes show a clear and substantial value advantage for GPT unitholders through merging with Lend Lease under the current proposal, as recommended by the GPT Independent Directors and the Independent Expert.
Further information is contained in the attached media release and detailed analysis [pdf - 233kb].stock exchange
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