ED property fund Rugby Estates revealed a 7.5 per cent increase in the value of its portfolio yesterday as it upped the stakes in bid talks with a trust run by Dutch manager ING.
Shares in Rugby rose 12.7 per cent to 55.5p after it announced a fresh external valuation rated its assets at £68.3m for the end of December, up from £63.5m in October.
Rugby and the ING UK Income real estate investment trust confirmed they were in early discussions over a potential takeover offer by ING. The ING trust is thought to have given Rugby the choice of 62p per share in cash or 65p in shares. The deal would value Rugby at £29m, a hefty premium to its undisturbed share price.
In brief statements, the companies said negotiations were ongoing and would not necessarily lead to a tie-up.
ING UK Income is being advised by its parent company’s corporate finance team. Rugby, which is run by property veterans David Tye and Andrew Wilson, is being advised by Hawkpoint Partners, the investment banking arm of Collins Stewart.
The approach from the ING trust comes after Rugby rejected a 41p per share offer from Laxey Partners, Colin Kingsnorth’s activist investment firm, in October.
AT Rugby Estates’ side in the discussions is Edward Arkus, a director at Hawkpoint with special responsibility for corporate advisory and private equity activities.
Having joined Hawkpoint as a trainee, Arkus has worked on mid-market deals including Hermes Private Equity’s £50m buyout of books and artists’ materials retailer Works Holding from Primary Capital in 2005.
He is one of a team of 90 dealmakers at Hawkpoint, which was bought out by stockbroker Collins Stewart for an estimated £150m in 2006.
Hawkpoint is advising Fairfield Energy on its planned London flotation. Recent work includes advising the Ontario Teachers Pension Plan on its acquisition of Acorn Care and Education in January, and guiding asset manager Towry Law through a private fundraising in the same month.
On the opposite side of the negotiations, William Marle is leading a team from ING Corporate finance. Marle last year helped broker Panmure Gordon complete the sale of a 44 per cent stake of its business to Qatari bank QInvest at a value of £23m.
He is joined by John Denby.