Fresh takeover approach to Green Property

Green Property is once again the focus of takeover activity after the group disclosed yesterday that it had received an approach which might lead to an offer.

While Green would not expand on its brief statement to the Irish Stock Exchange, it is understood that the management of Green - which tried to put together a management buyout two years ago - is not involved in the approach.

It is also understood that Treasury Holdings, the John Ronan-Richard Barrett company which made an approach last year, is not involved. Nor is Real Estate Opportunities, the split capital investment trust offshoot of Treasury Holdings, involved in the approach to Green.

Market sources said the approach could have come from any one of a number of British property groups, while some sources suggested that Green might also be the focus of attention from some private equity houses, possibly in a joint venture with a property company.

In its statement, Green said that the party which had made the approach had indicated that it might make an offer "at a modest premium to the current share price". This reference to a "modest" premium meant that, while Green shares initially traded up as high as €9.20, they subsequently weakened and closed on €8.80, a gain of just 10 cents on the day. At this level Green is valued at €907 million.

Green's share price is a 25 per cent discount to its net asset value and this means that Green is trading at a discount to mid-sized British property companies like Helical Bar, Brixton and Slough, which are trading on net asset value discounts of between 14 per and 21 per cent.

While Green has narrowed the discount gap against its peers it is still trading on a substantially higher discount that most of its peers.

The reference to a modest premium to the current share price possibly reflects the strong recent rise in the Green share price. Since the start of the year the property group's shares have risen from €6.30 to €8.80, a gain of almost 40 per cent. Market sources said it would be difficult for any bidder to pay a major premium to the current share price but, by the same token, Green's institutional investors might be reluctant to sell at current levels.

This is the third approach that Green has received in the space of two years. In the first half of 2000, a management group headed by chief executive Mr Stephen Vernon failed in an effort to put together a management buyout after the management decided that it could not offer a price that would be backed by the group's independent directors.

Shortly after the collapse of the MBO, it emerged that the private Treasury Holdings group - which is owned by Mr John Ronan and Mr Richard Barrett - made an approach which was subsequently rebuffed by the Green board. Later, Treasury and its backer Deutsche Bank Real Estate Private Equity, withdrew its proposal.