Morgan Stanley to Seek Court Backing for Vote on Dexus's IOF Bid

   By Rebecca Thurlow 
 

SYDNEY--Morgan Stanley (MS) is heading to court in Australia seeking a declaration of its right to vote on Dexus Property Group's (DXS.AU) 2.6 billion Australian dollar (US$1.9 billion) bid for Investa Office Fund (IOF.AU) as demand for commercial property in the country heats up.

The move by the U.S. investment bank comes after Dexus, Australia's biggest office landlord, made an application to Australia's Takeovers Panel asking Morgan Stanley be prevented from voting on the cash-and-shares bid when shareholders meet to decide on the offer next month, claiming it has a conflict of interest because of its relationship with the fund's manager.

In a filing to the Australian Securities Exchange on Wednesday, Investa Office Fund said it was notified by Morgan Stanley's real estate investing arm, which controls a 8.9% stake in the Investa, that it intends to file proceedings in the Supreme Court of New South Wales against the responsible entity of the fund.

Investa said it understands Morgan Stanley intends to apply for a declaration from the court that it is entitled to participate in the April 8 vote.

The court's decision could make or break Dexus's takeover plan, which requires 75% of the vote to succeed and would entrench Dexus's dominance of the listed office trust sector in Australia after it snapped up rival Commonwealth Property Office Fund in 2014 following a takeover fight with GPT Group.

The offer of 0.424 Dexus shares and A$0.8229 cash for every IOF share already has the approval of the IOF board, but is being opposed by Investa Commercial Property Fund Group, which took over IOF's management from Morgan Stanley as part of a move by the U.S. investment bank to divest its Australian commercial property business Investa Property Group. In an unusual misalignment between the advice of a real estate trust's manager and that of its board, ICPF is urging shareholders to reject the Dexus offer and instead buy half the management platform.

Dexus wants Morgan Stanley to abstain from voting, saying it would be unacceptable for the U.S. investment bank to vote because it is associated with ICPF. The second tranche of the A$90 million payment from ICPF for the management rights is conditional on IOF being still managed under the platform.

The Takeovers Panel said Tuesday it had received the application from Dexus but no decision had yet been made as to whether to conduct proceedings.

-Write to Rebecca Thurlow at [e-mail]

(END) Dow Jones Newswires

March 22, 2016 21:05 ET (01:05 GMT)

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