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DNZ Property eyes Argosy

Wednesday 11th May 2011

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DNZ Property Fund said it has approached Argosy Property Trust with a merger proposal but has been rebuffed.

Argosy unitholders would receive shares in DNZ Property at an agreed exchange ratio based on the relative value of each entity at the time of the transaction. DNZ Property would become the ongoing listed entity managing the combined portfolio internally.

"Unfortunately after our initial approach the independent directors of Argosy have so far declined to engage constructively," DNZ Property chairman Tim Storey said.

He said the combined business would have an internally managed New Zealand commercial property portfolio of significant scale and diversification across sectors and geography.

"While we have not had the opportunity to engage with Argosy or complete due diligence, we believe there is an opportunity to structure a merger of the two businesses that provides a better value outcome for Argosy unitholders, both immediately and over time," said Storey.

Argosy is the third largest property fund listed on the NZX by market capitalisation, according to its website.

Last month the trust announced plans to internalise rights to manage the trust currently held by Argosy Property Management Ltd, which is owned by ANZ subsidiary OnePath. The move involves a payment of $32.5 million to Argosy Property Management.

DNZ Property said there were concerns about the plan.

"On the public information we have, we understand why there is unitholder concern. The DNZ proposal could result in a material reduction in this payment to internalise or terminate the management arrangements while we also see DNZ providing additional ongoing benefits to a combined entity."

Any merger proposal would only be implemented after due diligence and would need to be approved at separate meetings of the DNZ shareholders and the Argosy unitholders.



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