Treasury Holdings is withdrawing its interest in acquiring Green Property, whose board has backed a buy-out proposed by its managing director, Mr Stephen Vernon.
The privately held property company is understood to have decided against increasing its offer for the quoted group after Mr Vernon's €1.05 billion bid was accepted on Tuesday by the board.
The development brings Mr Vernon's bid a step nearer completion, leaving one rival bidder in the frame. Deutsche Bank Real Estate Private Equity has indicated that it is continuing to look at Green and is reviewing its position. The bank made no comment yesterday.
The company was linked with Treasury Holdings in a bid for Green in 2000, which was subsequently withdrawn. On that occasion, there was also a rival bid by Mr Vernon. His group pulled out when it decided it could not offer a price that Green's independent directors could accept.
More than two million shares in Green Property changed hands yesterday as the stock closed unchanged at €9.70, an all-time high for the company. This is 10 cents weaker than Mr Vernon's bid of €9.80 per share.
Mr Vernon's vehicle, Rodinheights, is backed by Merrill Lynch and ICC Holdings, owned by Bank of Scotland.
It was backed by all independent directors on the board, i.e. all members except Mr Vernon, who was not independent.
The offer was ahead of initial indications, which suggested a price of €9.20 per share. It represents a discount of about 4.1 per cent on the adjusted net asset value per share of €10.22 at the end of last year.
It was also set at a 12.6 per cent premium on its price of €8.70 on May 13th, the day before Green announced that it had received an approach.
But credit-rating agencies reacted negatively to the recommendation by the Green board.
Fitch Ratings put BBB senior unsecured and F3 short-term ratings on rating watch negative. While the status was likely to be resolved once Rodinheights completed the acquisition, the agency said the downgrade was in view of increased financial leverage on the company.
Standard & Poor's put Green on review for a possible downgrade to junk status from its BBB rating on fears that the proposed takeover would favour shareholders over bondholders.
