Storage King.
Abacus Storage King, a major player in the self-storage sector, has received an enhanced takeover offer amounting to $2.17 billion from a consortium led by South African investor Nathan Kirsh. The offer is a notable increase from an initial bid proposed in April 2023, which valued the company at $1.93 billion but was rejected due to concerns over undervaluation.
The consortium, which includes Public Storage, initially proposed a bid of $1.47 per share. Following the rejection, Kirsh’s group emphasized their commitment to providing stability and value to minority shareholders. On Monday, Abacus Storage King announced a revised offer priced at $1.65 per share, reflecting a 15 percent increase over the original bid.
Market Response and Valuation Insights
Following the announcement of the improved offer, shares in Abacus Storage King rose nearly 6 percent, closing at $1.56. While the new bid represents a positive shift, it still falls short of an independent valuation that suggested the company’s portfolio of approximately 200 self-storage facilities is worth $1.73 per share.
Abacus Storage King operates a network of 206 self-storage sites across Australia and New Zealand, making it one of the largest entities in the industry. Its Australian footprint includes 68 locations in New South Wales, 44 in Queensland, 42 in Victoria, and 17 in Western Australia, alongside 24 sites in New Zealand.
Competitive Landscape and Due Diligence
The renewed bid comes amid increased competition, as local rival National Storage has raised its stake in Abacus Storage King to 9.51 percent. This strategic move may be aimed at challenging the takeover proposal, as National Storage previously acquired a 4.78 percent stake in April.
Abacus Storage King has stated that its independent board committee, with guidance from financial adviser Macquarie, will conduct a six-week due diligence period for the consortium. The revised offer is contingent upon various conditions, including necessary regulatory approvals from the Foreign Investment Review Board in Australia and the New Zealand Overseas Investment Office.
The company warned that there is currently no guarantee that the parties will reach an agreement on the terms of the proposal, nor that any agreed terms will meet the required conditions. Analysts from Citi observed that while the new offer is indeed stronger, risks remain regarding the acceptance by minority shareholders. They noted that a further improved proposal may be required to secure shareholder approval, especially in light of anticipated market trends in the Australian self-storage sector.
As the situation develops, the outcome of this takeover bid could significantly impact the landscape of the self-storage industry in the region, affecting not only shareholders but also employees and customers of Abacus Storage King.
