Charter Hall Group has agreed to acquire fellow property group Folkestone for $205 million, with the acquisition to be funded by cash from available investment capacity.
Under the agreement, Folkestone shareholders would receive $1.39 cash per share, comprising a Charter Hall cash consideration of $1.354 per share and a special dividend of $0.036 per share.
The Board of Folkestone has unanimously recommended that Folkestone shareholders vote in favour of the acquisition.
Also, Folkestone shareholders on the register as at 11 September 2018 will be entitled to a $0.03 per share ordinary dividend for fiscal 2018, payable on 27 September 2018.
Charter Hall said it expects the transaction to grow its funds under management by $1.6 billion, deliver fund management and development investment earnings, and drive earnings accretion for the group.
It also expects the acquisition of Folkestone to expands its investable universe into the early learning sector, a sector underpinned by population growth, increasing workforce participation and government funding.
Charter Hall managing director and group chief executive, David Harrison, said the Folkestone business model is consistent with his company’s existing strategy.
“We are attracted to their leading position in the social infrastructure sector and the suite of listed and unlisted funds adds to our diversity of sources of equity, whilst their origination capability is expected to generate property investments for the expanded list of managed funds,” he said.
“Importantly, the Folkestone culture shares many similarities to Charter Hall’s own culture and we see the two organisations as a close fit.
“We look forward to Folkestone executives joining Charter Hall and the complementary skills they will bring as we work together to grow the funds management platform.”
Both Charter Hall and Folkestone announced the deal alongside their fiscal 2018 results, with the former announcing an operating profit of $175.8 million, up 16 per cent, and the latter posting a $13.9 million statutory profit, up 3 per cent on fiscal 2017.
