Aareal’s Investor Teleios Calls New $2.1 Billion Bid ‘Lousy’

(Bloomberg) -- Aareal Bank AG’s key investor Teleios Capital Partners renewed its objection to a takeover bid for the German lender after suitors Advent International and Centerbridge Partners increased their offer to 1.86 billion euros ($2.1 billion).

“We believe this token increase still represents a sweet deal for Advent and Centerbridge and a lousy one for shareholders, who should hold out for fair ,” Adam Epstein, co-founder of Teleios, which holds a 6% stake, told Bloomberg in a written statement. Aareal Bank shares pared earlier gains and were little changed at 11:21 a.m. in Frankfurt trading.

The private equity firms raised their initial bid by 7% to 31 euros a share, saying it’s their “best and final” offer, according to a statement on Wednesday. 

Teleios and another major investor, Petrus Advisers, had rebuffed the initial offer over diverging views on valuation. A key point of contention was the lender’s software arm, known as Aareon AG, whose the investors said wasn’t reflected in the offer price. 

Aareal resisted Petrus’s previous calls to pursue a full sale of Aareon and instead sold a minority stake in the unit to Advent, which then went on to make a play for all of Aareal with a partner. Advent regards the software business as a potential candidate for an initial public offering in the future, Bloomberg News reported previously.

Petrus, which said it has a 16% interest in Aareal, estimates the fair of Aareal’s Aareon stake alone at about 19 euros to 26 euros per Aareal share. Aareal owns 70% of the asset, after selling 30% to Advent. Petrus declined to comment on Wednesday.

Aareal Bank last week warned that a spinoff of Aareon would jeopardize plans to increase the of the unit. It would also be subject to a statutory five-year secondary liability, which would likely have a significant impact on its , the lender said.

Advent and Centerbridge last week lowered the minimum acceptance threshold for the offer to 60% and gave shareholders until Feb. 2 to tender their stock.

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