AVID Property Group, a private equity-backed property developer, has announced a $374.6 million takeover bid for AVJennings (ASX: AVJ), a prominent Australian residential development company. The move is set to significantly boost AVID’s presence on Australia’s eastern seaboard, with the acquisition of AVJennings’ portfolio of nearly 10,000 residential lots across key markets in New South Wales, Victoria, and Queensland.
A Strategic Expansion
Just five years after acquiring Villa World for $410 million, AVID is looking to expand its footprint even further, adding AVJennings’ pipeline of residential projects to its portfolio. If the deal goes through, it will almost triple the size of AVID’s portfolio, from 6,300 residential lots to almost 16,300 lots, creating a $5 billion revenue pipeline. Additionally, the acquisition would grant AVID exposure to the South Australian and New Zealand markets, where AVJennings also operates.
Details of the Offer
The takeover bid was made through Proprium Capital, the entity managing AVID on behalf of global institutional investors. The offer price is 67.1c per AVJennings share, representing a 97% premium over AVJennings’ closing price of 33c per share on the previous day. This sharp rise in the stock price signals significant market interest and support for the bid.
AVJennings’ board of directors has given the go-ahead for exclusive due diligence for AVID Property Group, with a binding offer expected by January 2025. The deal also includes provisions for a fully franked special dividend of up to 6c per share, which would offer AVJennings shareholders additional benefits.
Challenges and Context
This takeover bid comes after a challenging financial year for AVJennings, which saw a 29% increase in property settlements during the September quarter but was also impacted by a $17.8 million write-off on a failed project in Queensland and a decline in profit margins. The company reported a net profit of just $1.57 million for FY24, a significant drop from previous years.
Despite these challenges, AVJennings has continued to focus on its South-East Queensland and South Australian markets, which have been performing strongly. While markets in NSW are showing signs of recovery, Victoria remains a slower market.
Looking Ahead: Regulatory Approval and Market Impacts
The proposed acquisition is still subject to Foreign Investment Review Board (FIRB) approval, as well as the approval of AVJennings shareholders and the court. If successful, the deal would solidify AVID Property Group’s position in the Australian residential market, making it one of the country’s leading developers.
AVID’s parent company, Proprium Capital, has a global reach with US$4 billion in net assets across the living, hospitality, and logistics sectors. The successful integration of AVJennings into the AVID portfolio would further strengthen its dominance in the Australian property market.
