(Bloomberg) — Aareal Bank AG’s key investor Teleios Capital Partners renewed its objection to a takeover bid for the German lender after suitors Advent International and Centerbridge Partners increased their offer to 1.86 billion euros ($2.1 billion).
“We believe this token increase still represents a sweet deal for Advent and Centerbridge and a lousy one for shareholders, who should hold out for fair value,” Adam Epstein, co-founder of Teleios, which holds a 6% stake, told Bloomberg in a written statement. Aareal Bank shares pared earlier gains and were little changed at 11:21 a.m. in Frankfurt trading.
The private equity firms raised their initial bid by 7% to 31 euros a share, saying it’s their “best and final” offer, according to a statement on Wednesday.
Teleios and another major investor, Petrus Advisers, had rebuffed the initial offer over diverging views on valuation. A key point of contention was the lender’s software arm, known as Aareon AG, whose value the investors said wasn’t reflected in the offer price.
Aareal resisted Petrus’s previous calls to pursue a full sale of Aareon and instead sold a minority stake in the unit to Advent, which then went on to make a play for all of Aareal with a partner. Advent regards the software business as a potential candidate for an initial public offering in the future, Bloomberg News reported previously.
Petrus, which said it has a 16% interest in Aareal, estimates the fair value of Aareal’s Aareon stake alone at about 19 euros to 26 euros per Aareal share. Aareal owns 70% of the asset, after selling 30% to Advent. Petrus declined to comment on Wednesday.
Aareal Bank last week warned that a spinoff of Aareon would jeopardize plans to increase the value of the unit. It would also be subject to a statutory five-year secondary liability, which would likely have a significant impact on its value, the lender said.
Advent and Centerbridge last week lowered the minimum acceptance threshold for the offer to 60% and gave shareholders until Feb. 2 to tender their stock.
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