Move on Minerva threatens to spark bidding war for London developer - UKCIG

An African financier has made a cash offer of 50p a share for Minerva, the property developer, valuing the company at £85 million.

Nathan Kirsh, the 77-year-old head of Kirsh Group, a Swaziland-based investment company, tabled the bid on Monday night through Kifin, the Kirsh family investment vehicle.

It is the second takeover offer for Minerva in 16 months. The first, in July last year, valued the company at 160p a share before negotiations fell through.

Minerva, which owns the Walbrook and St Botolphs developments in the City, the Ram Brewery in Wandsworth, South London, and the Leinster House Hotel in Bayswater, West London, said that it would reject the bid as “an opportunistic and unwelcome attempt to acquire Minerva at a price which significantly undervalues the company and its future prospects”.

Mr Kirsh’s offer represents a 31 per cent premium to Minerva’s closing price of 38¼p on Monday and a 52 per cent premium to the average share price for the previous three months.

The value of the company’s shares has been hit by the downturn in the past two years and was knocked further when Limitless, the Dubai-based developer behind last year’s bid, withdrew from talks last September. Minerva’s share price reached a high of 417½p in April 2007 before falling to a low of 5.46p in March. The share price closed yesterday at 52½p.

In recent months, the group has restructured £750 million of its £1 billion debt and a spokesman said that it had “enough capital in place in the short term to bring all of its developments to the market”.

Mike Prew, a real estate analyst at Nomura, said: “Minerva previously ‘defended’ itself from an ‘indicative’ bid at 160p . . . since which the shares have tested the 6p level. There is probably the risk that the business is in a net liability situation.” Market commentators said that the offer could spark a bidding war between investors keen on gaining exposure to commercial property at an ebb in the cycle.

Overseas buyers with millions of pounds to deploy have been seeking cheaply priced assets, but are thought to be turning their attention to real estate investment trusts in the absence of stock on the market.

Alan Samson, a partner specialising in real estate at Gibson, Dunn & Crutcher, the law firm, said: “This is not a surprise. It has been known for some months that [Kirsh] was stake-building. It is classic bottomfishing for distress. Kirsh obviously likes the portfolio and Minerva has some interesting sites. It is a pretty shrewd move. What will be interesting is that someone else could now go higher. It is likely to start a bidding war because there is so little stock around.”

Mr Kirsh built his stake in Minerva to 29 per cent in January, apparently in preparation for this week’s bid. Under regulatory rules, investors must bid for a company once the stake has exceeded 30 per cent.
Mr Kirsh’s other business interests include a holding and directorship with Magal Security, an Israeli security group.

Minerva said that it was focusing on maximising the value of its portfolio, highlighting discussions with investors regarding a property on Wigmore Street, Central London.

UKCIG Property news, November 2009