ESR buyout group close to making US$7 billion binding bid: sources

A consortium seeking to buy out Hong Kong-listed ESR Group is nearing a HK$13-a-share binding offer for the logistics real estate firm, people familiar with the matter said, a move that would bring the months-long takeover pursuit one step closer to an end.

The consortium, which includes investment firms Starwood Capital Group, Sixth Street Partners, SSW Partners, Warburg Pincus and Qatar Investment Authority, is hammering out details of a formal offer that could be announced soon, the people said, asking not to be identified because the matter is private. The potential bid could value ESR at about US$7 billion, the people said.

At HK$13, the offer would represent a premium of more 55 per cent to the undisturbed share price of HK$8.35 in April. Bloomberg News reported in May that ESR received a first non-binding and conditional proposal from a group of investors including Starwood, Sixth Street and SSW. In February, people familiar with the matter said that ESR’s top shareholders were studying options for the Asian warehouse developer including a take private.

A majority of shareholders outside of the bidding consortium have pledged to support the deal, the people said. Talks are ongoing and the timing of an offer could still take longer, they added.

Representatives for the consortium and ESR did not immediately respond to requests seeking comment.

Talks over the buyout of ESR have dragged on for several months, with the company’s fragmented ownership representing a key hurdle, people familiar with the matter have said. Shareholders have had different value expectations and it would take only a few opponents to block the transaction, the people have said.

Reuters on Nov 28 reported that the consortium may take ESR private in the coming weeks. ESR closed at HK$11.44 last Thursday, giving the company a market value of HK$48.6 billion (S$8.4 billion). The shares have been suspended from trading since Friday.

The consortium submitted an updated non-binding proposal in October, offering ESR shareholders the option to receive cash or roll over their shares, or a combination of both. As part of the updated offer, existing ESR investor Qatar Holding, an arm of sovereign wealth fund QIA, expressed support for the proposal and joined the consortium for the potential buyout, along with Warburg Pincus and ESR founders. The buyer group already holds about 40 per cent of ESR’s shares.

ESR, which has US$154 billion in assets under management, focuses on real estate such as warehouses and data centres in markets including Australia, China, India, Japan, New Zealand, Singapore and South Korea. BLOOMBERG