The war of words between Green Property and its takeover target, Trafford Park Estates, is intensifying. The statement by Trafford's chairman, Sir Neil Westbrook, that Green's offer undervalued Trafford was "inconsistent with statements made while the company was considering a merger with Barlow plc earlier this year", Green has said.
"Under the terms of the Barlows merger proposal, Trafford Park Estates proposed to issue shares representing approximately 24 per cent of your company's current issued share capital to Barlows shareholders at a price of 160p (sterling)," said Mr Stephen Vernon, Green's managing director.
However, Green's all-share offer values each Trafford share at 210p and the Trafford group at some £145 million. This is being resisted by the Trafford board. The first closing date is June 12th. Green has produced graphs which show that it has significantly outperformed the British property sector over the last five years. However, reacting to this statement, Trafford has stressed that 10 years is a more appropriate time period and, if this is used, Trafford's compound annual growth rate in net asset value "is superior to that of Green". Green's finance director, Mr Danny Kitchen, has disagreed saying "it is all about activity" and he did not think any of his shareholders took a 10-year (historic) view.
Trafford has also contended that Green has disguised the inadequacy of its cash offer (11p below net asset value) by factoring in a capital gains tax charge of £7.5 million. "This tax is irrelevant to the value of the company since the board has no intention of selling its portfolio". However, Mr Kitchen said it was relevant as the only way to release cash was to sell the property.
Trafford quoted a recent press interview in which Mr Vernon said: "I think I can do really good things with it (the Trafford portfolio)". It uses this statement to conclude that Green's motivation for seeking to undermine the potential valuation of the portfolio is clear as it wants to acquire the company's assets "on the cheap". Mr Kitchen has disagreed saying: "We are not prepared to pay for skills we are bringing to it (Trafford)."
