Advent, Centerbridge Near Improved Aareal Bank Bid

(Bloomberg) -- Advent International and Centerbridge Partners are preparing a fresh bid for Aareal Bank AG at a 2 billion euros ($2.2 billion) valuation just weeks after failing to take over the German real estate lender.

The private equity firms intend to submit an improved offer of 33 euros per share, according to a statement by the bidders on Tuesday, confirming an earlier Bloomberg News report.

Advent and Centerbridge said they have already secured about 37% of the shares after reaching deals with major investors including Petrus Advisers, Teleios Capital, Vesa Equity Investment and Talomon Capital, who have committed to accept the offer of 33 euros for their shares or sell them to the bidders outside the tender offer. Some of the bidders will partially reinvest into the bidding vehicle, giving them a long-term stake of about 20%.

Aareal said in a separate statement the offer price includes the dividend of 1.60 euros per share previously proposed by the bank and the bidders consider a minimum acceptance level of no more than 60%. For their previous takeover attempt, Advent and Centerbridge had lowered the pass rate from 70% to 60%.

The agreements with existing shareholders are increasing the odds for a new offer to be successful, making an approval by German regulator BaFin likely. The private equity investors require approval from Aareal's corporate bodies as well as from BaFin to overcome the statutory one-year blocking period for a renewed bid.

Petrus, which holds a stake of 18% in Aareal through stocks and derivatives, was among shareholders that in February rejected the previous “best and final” 31 euro-per-share offer. In a statement on Tuesday, it said it deems the improved price as fair.

Aareal is considering whether to postpone the regular annual general meeting scheduled for May 18 as it examines the new situation. Shares closed up 8.1% at 31.40 euros Monday in Frankfurt after Bloomberg reported the new plans, the highest level in more than two years, giving it a market value of about 1.9 billion euros.

A key point of contention surrounding a takeover of Aareal has been the German lender's software arm, known as Aareon AG, whose value investors said wasn't reflected in the earlier offer price. Aareal in 2020 sold a minority stake in the unit to Advent, which then went on to make a play for all of Aareal with partners.

After the first failed bid by Advent and Centerbridge, Wiesbaden-based Aareal revealed it had received a takeover approach from another consortium, which eventually withdrew its offer. It also said it expects operating profit to rise to as much as 250 million euros this year, up from 155 million euros in 2021, and announced the acquisition of payment service provider Collect Artificial Intelligence GmbH for an undisclosed sum.