Property giant Stockland's hopes to snare rival Australand have been dealt a massive blow, with the takeover target agreeing to a $2.6 billion offer from Singapore.
Singaporean developer Frasers Centrepoint has wrapped up four weeks of looking at Australand's books and made a $4.48-a-security offer for the local residential and commercial property group.
Australand says its directors intend to accept the cash offer and is recommending investors do the same.
The news is a major blow for Stockland, which made a $2.5 billion share-swap offer for Australand in April but was rebuffed.
"After carefully considering the offer, the Australand directors unanimously recommend the offer, in the absence of a superior proposal and subject to an independent expert opinion concluding the offer is fair and reasonable to Australand securityholders," Australand said in a statement on Wednesday.
As part of the process, Australand has entered into a bid implementation agreement with Frasers.
The agreement sets out how the pair plan to co-operate with each other as the takeover process progresses.
However, Australand said it still has the right to terminate the agreement if a superior bid emerges.
Stockland boss Mark Steinert indicated in June that his company may not be willing to increase its bid for Australand.
Morningstar analyst Tony Sherlock said he doubted that Stockland would try to trump Frasers Centrepoint.
"It's hard for Stockland to generate value above the $4.48 offer," he said.
"It would be difficult to get value out of the transaction to make it earnings accretive for Stockland."
A Stockland spokesman said: "Our previous statement stands ... we are considering our options."
Stockland shares closed three cents higher at $3.89 while Australand rose four cents to $4.48.
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