CITY Pacific Ltd, an Australian property investor and fund manager, offered to buy the fund management business of rival MFS Ltd for about A$832.5 million (US$745 million).
City Pacific plans to issue 225 million new shares at A$3.70 apiece for MFS, the Brisbane-based company said yesterday in a statement. The deal excludes MFS's Stella Tourism Group.
The purchase would more than triple City Pacific's investment clients to 70,000, said Lee Danahay, a group executive at City Pacific. The bid comes after MFS shares slumped 33 percent the past month, Bloomberg News said.
"They are our largest competitor, but we have similar approaches in terms of the assets we manage and the investors we market to," Danahay said yesterday in an interview. "The possibility of joining MFS gives a lot of opportunities for value raising."
MFS, based in Southport in Queensland state, rose 10.99 percent to A$3.94 on the Australian Stock Exchange. City Pacific closed unchanged at A$3.70.
Including debt of A$500 million, the deal values the MFS financial services business at about A$1.33 billion, the statement said.
MFS appointed UBS AG to advise it on the offer.
The Stella assets that are not part of the offer include franchises for Australian hotel brands such as Peppers and Saville, as well as travel agency Harvey World.