Abacus Storage in play as billionaire and US giant team for bid

One of the best known international billionaires in the property sector has joined with a US giant to take out the minority shareholders in the struggling Abacus self-storage trust.

Abacus Group CEO Steven Sewell.

South African billionaire Nathan Kirsh has teamed up with US giant Public Storage to make a takeover bid for Abacus Storage Property Trust that values the entire company at about $1.93bn.

The move to mop up the minority shareholders defies market volatility and could spark consolidation in the local storage sector, as the US group has previously attempted a takeover of rival ASX-listed National Storage REIT before walking away during the pandemic.

Abacus Storage, operates under the Storage King brand, and shareholders would be entitled to receive a cash offer of $1.47 per stapled security, a 26.7 per cent premium to its last price of $1.16.

 The consortium has now submitted a non-binding indicative offer and the target company said it had formed an independent board committee to assess the proposal but said it “has not at this stage formed any view on its merits”.

Investment bank Goldman Sachs is advising the consortium and Macquarie is advising the target trust.

The Abacus-run storage trust has traded softly since it was spun out of its parent, and Kirsh’s Ki Group already holds an existing direct and indirect interest in the trust of about 59.47 per cent.

An Abacus Storage King facility in Robina.

The pair are billing the takeover as offering certain and immediate value upfront to minority securityholders with an all cash offer and a liquidity opportunity for minority investors.

They are also offering what they called “execution certainty and liquidity” given the proposal was fully funded with limited conditionality, at a time when equity markets are falling.

The bidders said there was an opportunity to remove the exposure to the ongoing risk of further business value deterioration under the status quo structure

Ki Group chief executive Sir Bradley Fried, who was a member of the Bank of England’s Court of Directors, cited the trust’s underperformance for the takeover move.

“As a significant and long-term securityholder, we have remained an active supporter and partner to Abacus Storage King and its success. However, the entity has continued to underperform relative to peers and the broader market since listing,” he said.

“The demerger of 2023 has failed to deliver the promised value for securityholders and the entity’s security price has declined 18 per cent since then, delivering a negative annualised total securityholder return of -7 per cent,” he said, noting the “stark” contrast to S&P ASX 200 REIT index return of 11 per cent.

“With a free float of just 39 per cent, the entity faces structural impediments which not only inhibit its ability to grow but may cause further deterioration,” he said.

“Our consortium’s non-binding indicative offer represents a compelling 26.7 per cent premium to Abacus Storage King’s closing price providing securityholders with a meaningful opportunity to immediately crystallise value on implementation of our proposal in turn creating a more viable path forward for the employees, customers and operations of Abacus Storage King,” he said.

The management of the storage fund would shift from Abacus to the independent trust as it was privatised.

Mr Fried is also a former CEO of Investec and now heads South African billionaire Nathan “Natie’’ Kirsh’s family office.

Much of Kirsh’s $US6.9bn ($11.3bn) fortune is held in US-based Jetro Holdings, which owns restaurant supply stores Jetro Cash and Carry and Restaurant Depot. It supplies wholesale goods to stores and restaurants across the United States.

Kirsh made his first fortune from a corn milling business in his native Swaziland, and then moved into supermarkets and commercial property.

Mr Kirsh is also a substantial holder in Abacus Group, manager of the storage trust, and owner of an office and retail portfolio, and his move effectively puts the future of that group into play.

Citi analysts said the deal was on an 8 per cent discount to the storage fund’s most recent net tangible assets and flagged the US group could shake up the sector.

“The entry of Public Storage into the Australian market may increase competitiveness in the sub-sector with potential increased capital for expansion and development,” they said.

Abacus Storage shares were up 14c to $1.30 in morning trade, with Abacus Group dipping by 3c to $1.06, amid the market rout.

Originally published as Abacus Storage in play as billionaire and US giant team for bid