Florence Chong | January 14, 2009
Article from: The Australian
INCREASED trading in Melbourne-based Becton Property Group has prompted an Australian Securities Exchange query, the second in six weeks.
The ASX yesterday asked why the unit price had jumped from 15.5c last Friday to a high of 21c on Monday.
In its response, Becton said it had been having discussions about recapitalisation and acquisitions, but it said these talks were incomplete.
The company also said there would be no change in its earnings and profit guidance.
Some 1.3 million shares were traded yesterday, pushing the unit price down 2c to close at 16.5c.
Industry sources said it was widely known that Becton, which carried some $525 million of debt on its balance sheet at the end of November, needed a capital injection.
They believed that Becton was ripe for a takeover.
"Becton has $2 billion under management. This arm of its business is appealing to an investor," a Melbourne-based consultant said. He said the market had written down the value of funds management businesses to zero.
The consultant undertook research on behalf of two separate clients, but both decided to abandon the exercise last month.
"One party said it could not find the financing for an acquisition of this size, and the other party was concerned that it would stretch its own balance sheet too far," he said.
The source said Becton was under pressure from its banks to reduce debt, but its lenders were not about to pull the plug.
He estimated that potential buyers could be expected to pay between $80 million and $120 million to get control of the company, founded by well-known Melbourne developers Max Beck and Michael Buxton.
Becton has several options, including selling its funds management business, its retirement village business or its residential development business.
Becton's market capitalisation had fallen from $818 million
in November 2007 to a low of $10.7 million last November, before recovering to $30 million yesterday.
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