Kennedy Wilson Europe shares rise on sweetened €1.44bn takeover bid

Shares in Kennedy Wilson Europe (KWE), which owns over €1 billion of Irish property, soared as much as 10.6 per cent on Tuesday as the US group that set up and floated the London-listed company in 2014 sweetened an offer to take it over again.

California-based Kennedy Wilson Holdings (KW) reached an preliminary agreement in late April to buy the 76 per cent of London-listed KWE that it does not already own in an all-cash deal.

However, shareholders in both companies baulked at the terms. Hedge fund guru George Soros's Quantum Partners fund, which owns 12 per cent of KWE, publicly criticised the fact that KW was only offering to pay in its own stock, rather than cash.

Meanwhile, market sources said some KW investors believed the deal undervalued KW while not applying enough of a discount to KWE shares to reflect uncertainty around Brexit, given that most of its assets are in the UK. A subsequent drop in KW’s share price served to lower the value of the offer.

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However, KW announced on Tuesday that it was improving its pitch to include shares, cash and a special dividend in a bid that values the London-listed company at about £11.45 (€12.99), based on its closing price on Monday. This would value KWE at £1.44 billion.

Soros backing

Goodbody Stockbrokers analyst Colm Lauder said that while the new offer is below the original £11.74 value of the original bid in April, the subsequent fall in KW's share price had already pushed the implied price down to £10.30 per KWE share.

Crucially, the new offer has been backed by Mr Soros's fund, as well US investment firm Franklin Templeton, who together own 22 per cent of KWE. Investors holding a further 14 per cent have also indicated their support.

“The new KWE merger offer has a much wider support base than the original offer and has a much higher chance of success,” said Mr Lauder. “We expect this new offer proposal to be approved by KWE shareholders.”

KW began investing in Irish property in 2011, making it among the first overseas companies to dip its toe into the Irish market following the 2008 crash. The portfolio of the London-listed vehicle it floated in 2014 includes the Stillorgan Shopping Centre, Portmarnock Hotel and Golf Links, Baggot Plaza building in Dublin 4 and numerous multi-unit residential rental developments in the capital.

As of the end of last year, the Republic accounted for 31 per cent of KWE’s assets, while the UK made up 56 per cent. Spain and Italy accounted for 7 per cent and 6 per cent, respectively.

Shares in KWE jumped as much as 10.6 per cent to £11.39 on Wednesday morning.