Stockland Group's takeover bid for Aevum (ASX:AVE) looks set to be rejected after the retirement villages company advised shareholders to reject a $266 million offer.
In a letter to shareholders, the board of said it had rejected the $1.50 cash per share offer from Stockland - saying it significantly undervalues the company.
The board said the offer was at a discount to Aevum's net tangible asset per share amount and was highly opportunistic in light of Aevum's recent profitability and operating cash flows upgrade.
Aevum also said the offer didn't take into account its well-performing recent merger with Victorian-based retirement homes operator IOR Group, and that Stockland's offer doesn't reflect the substantial synergies that the property developer would gain from the proposed acquisition.
Aevum's 2008 net profit position slipped away in 2009 with the company posting a $12 million loss in the 12 months to 30 June.
AVE Price at posting:
$1.66 Sentiment: None Disclosure: Held
