Australian pub landlord Hotel Property Investments jumped to a 19-month high on Monday, set for its best session in one-and-a-half years, after its top shareholder's buyout offer valuing the company at A$716.5 million (US$478.4 million).
However, Hotel Property Investments, which owns 58 pub and hotel properties, rejected the A$3.65-per-share offer from Charter Hall Retail REIT, which has a near 15 per cent stake in the firm, saying it undervalued the company.
Shares of Hotel Property Investments jumped as much as 6.6 per cent to A$3.71, above the offer price and indicating shareholders were expecting a better offer.
Morningstar analyst Adrian Atkins concurred, saying it backed Hotel Property's rejection of the offer and that there was no reason for an immediate sale.
"HPI is in sound financial health, revenue is defensive thanks to long leases and relatively good quality pubs."
Charter Hall Retail and bidding partner, superannuation fund Hostplus, said the offer is fully funded and provided an attractive premium to Hotel Property Investments's historical trading levels.
Its parent is Charter Hall Group, Australia's largest pub owner and the operator of hotels like Young & Jackson in Melbourne.