Abrdn Property Income: Custodian bid voted down by shareholders

Custodian Property Income REIT’s bid to take over Abrdn Property Income has failed, after not enough shareholders voted for the merger.

In a general meeting yesterday, Abrdn shareholders voted 60.8 per cent in favour of the deal, less than the required 75 per cent threshold.

Custodian’s offer would have seen Abrdn shareholders receive 0.78 Custodian shares for each Abrdn share.

“Following the original merger announcement, Custodian’s share price declined significantly, eroding the premium and leaving some shareholders to question the rationale,” noted Peel Hunt analysts James Carswell and Matthew Saperia.

Since the rejection from shareholders last night, Custodian’s share price has jumped 14.7 per cent, returning to close to where it had been before the offer was made in January.

Now, the Abrdn trust will begin the process of winding down, which the board had said was the sole alternative to a Custodian sale.

“14.17 per cent of shareholders voted against the merger, seemingly swayed by the lure of a managed wind down given the board had already indicated this would be their intention should the merger vote not pass,” said Numis analyst Andrew Rees.

Some of the trust’s assets may be snapped up by Urban Logistics REIT, who pulled out of their rival bid for the Abrdn trust earlier this month, and had proposed absorbing two thirds of the portfolio while selling off the rest.

Last week, Abrdn Property Income chair James Clifton-Brown told City A.M. that it was “misleading to shareholders” to suggest that the trust will be able to get a fair value for selling off its properties.

Duncan MacLellan, chair of Custodian, said that the trust had “heeded clear calls from the market regarding the need for consolidation amongst the listed REITs” when pursuing the deal.

MacLellan said Custodian’s board was “disappointed” by the result, and were primarily from institutions who believed a wind-down would better protect shareholder value, despite the Abrdn board “clearly and publicly setting out the flaws in this conclusion”.