The South African fund Vukile, owner of the mall-focused REIT Castellana Properties and the top shareholder of its counterpart Lar España, has engaged Bank of America and Linklaters after the takeover bid launched by Grupo Lar and the U.S. fund Hines on Lar España. This marks a pivotal move as the bid advances and market participants weigh potential responses.
In a published statement, Vukile indicated that, with its financial and legal advisors, it will thoroughly examine the offer presented by Grupo Lar and Hines to acquire Lar España and will explore its strategic options. One possibility under consideration is launching a counteroffer to increase its stake, which currently stands at 28.7%. The South African vehicle also stressed that it has not held any talks with the consortium made up of Hines and Grupo Lar about a potential transaction.
Hines, led in Spain by Vanessa Gelado, along with Grupo Lar, the manager of Lar España and holder of 10% of the capital, announced a bid for 90% of the REIT at 8.1 euros per share. That price values the entire company at close to 680 million euros and represents a premium of 25% over the last six months’ weighted average price, though it also implies a 20% discount when net asset value is considered after deducting debt.
The market anticipates a possible counteroffer
Since the bid was made public, market observers and analysts have questioned the fairness of the offer, with Lar España’s stock trading around 8.2 euros, which sits above the bid price in what is typically seen as a rare anomaly. The prevailing sentiment in the sector has been rife with speculation about potential actions Vukile could take next, given the strategic fit with its own portfolio.
Vukile entered Lar España in January 2022 after taking a 21.7% stake when ownership was held by Pimco. The fund then increased its position gradually but remained below the 30% threshold that would trigger a mandatory offer. In the following months, talks with various investment banks were pursued to propose a corporate operation, but changes in monetary policy cooled those plans.
As required by takeover rules, if Vukile intends to increase its stake, it would have to launch a counteroffer at a price above the Hines-Groupe Lar bid for it to be reviewed by the CNMV. At this stage, the fund has not disclosed whether it will do so; it has only stated that it will analyze its strategic alternatives. The board, which has established a monitoring committee for the ongoing offer, faces limitations when it comes to communicating with other potential bidders, including the South African fund itself.
From the outset, Vukile’s entry into Lar España, a competitor to its Castellana Properties unit, has been described as a financial investment rather than a strategic takeover, capitalizing on the discount between the market price and the value of the assets. Remarkably, despite being the largest shareholder, Vukile has not sought board seats; the five-member board comprises four independent directors and one executive, Miguel Pereda, who chairs Grupo Lar.