Advent, Centerbridge Fail to Get Enough Support for Aareal Bank Bid

(Bloomberg) -- Advent International and Centerbridge Partners failed to get enough support for their planned 1.86 billion euros ($2.1 billion) takeover of Aareal Bank AG after key investors rejected the offer over diverging views on valuation.

Teleios Capital Partners and Petrus Advisers, two activist shareholders with a combined interest of more than 20%, had repeatedly rebuffed the takeover bid, arguing the offer price was too low. A key point of contention was the German lender’s software arm, known as Aareon AG, whose value the investors said wasn’t reflected in the price.

The bidders are highly unlikely to make another takeover attempt, according to people close to the bidders.

They had attempted to win over holdouts by raising the offer price from 29 euros to 31 euros a share. They also lowered the minimum acceptance threshold to 60% from 70% and gave shareholders more time to tender their stock.

The bidders didn’t say by how much their effort undershot the 60% threshold.

Another key investor, Daniel Kretinsky, was supporting the offer for Aareal Bank, Bloomberg reported. The Czech billionaire’s investment vehicle Vesa Equity Investment holds a stake in Aareal Bank, according to the latest available data compiled by Bloomberg.

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 Bank with partners. Petrus estimates the fair value 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.

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

Teleios fund manager Adam Epstein has said a fair consideration for Aareal Bank could exceed 40 euros per share. Reacting to the failed bid, Epstein said Aereal’s board must do more to defend the company from such “flagrant opportunism” in the future.

“As long-term shareholders, we are committed to working with Aareal to help install a board that exists to maximize value for all stakeholders, not just those partners it credulously chooses,” he said.

Aareal separately confirmed its full-year earnings targets on Friday. The company also said it expects its portfolio volume to rise by 1 billion euros per year over the next three years to reach 33 billion euros by 2024, boosting net interest income.

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