Homburg Canada to launch takeover bid for all of Homburg Invest Inc.

HALIFAX – Homburg Canada Inc., a private company owned by investor Richard Homburg, is launching a hostile takeover bid to privatize Homburg Invest Inc. (TSX:HII.A), a real estate company he already controls.

The move announced Friday comes after Homburg Invest rejected an earlier proposed friendly deal to be acquired.

Homburg said he will go directly to shareholders to offer $3.25 in cash for each Class A and B share of the real estate investment company.

Based on a total of about 17 million class A shares and 3.1 million class B shares, the offer values the owner and operator of residential and commercial real estate properties at about $63.3 million.

In a later development Friday, Homburg Invest said its board had terminated the master property and asset management agreement between the two companies.

In addition, the board has internalized the positions of president and chief executive, held by Jan Schöningh, and chief financial officer, held by James Miles.

Before the move announced Friday, Homburg Canada provided property and asset management services to Homburg Invest.

In its release announcing the hostile bid, Homburg Canada said the proposed going-private transaction will benefit both companies.

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“HCI believes the $3.25 all-cash offer, if and when made, would be highly attractive to HII shareholders as it provides immediate cash liquidity for shareholders at a premium far exceeding average Canadian going private transaction premiums in the last decade,” Homburg Canada said in a release before stock markets opened.

“Furthermore, it would offer HII shareholders certainty on value for their shares and HCI firmly believes that the combination of HCI and HII would significantly strengthen HII’s balance sheet to the immediate and long term benefit of all HII’s stakeholders, including the bondholders.”

Earlier this week, Homburg Invest rejected an earlier going-private deal from Richard Homburg.

“After careful consideration, including of the report and recommendation of the committee, the board has determined that the proposal in its current form is not in the best interests of (Homburg Invest) as it cannot be implemented as proposed,” Homburg Invest said Monday.

Homburg currently owns about 46.2 per cent of the outstanding shares of the Halifax-based property company, representing 72.5 per cent of voting control,

The latest moves added another wrinkle in a dispute involving Homburg Invest and regulators in the Netherlands, who have ordered the company to remove Homburg as a decision-maker.

Homburg Invest said in late May it was “vigorously contesting” the order by the Authority for Financial Markets in the Netherlands.

It said the order emerged from a dispute between Dutch tax officials and “a private individual (Homburg)” and that it lacked authority to take such action under either Canadian or Dutch law.

Homburg Invest owns and develops office, retail, industrial and residential apartment and townhouse properties throughout Canada, the United States and Europe.