Fat Prophets Global Property Fund Rejects Unsolicited Merger Proposal from Lanyon
FPP (FPP) Share Update December 2024 Wednesday 4th
Fat Prophets Global Property Fund Rejects Merger Proposal
On December 5, 2024, Fat Prophets Global Property Fund announced its decision to reject an unsolicited merger proposal from Lanyon Asset Management, citing concerns over fairness and alignment.
Instant Summary:
- Unsolicited merger proposal from Lanyon Asset Management.
- Proposal deemed unfair and unreasonable by Fat Prophets.
- No compelling reasons found to present the proposal to unitholders.
- Lanyon's previous attempts to influence FPP management were unsuccessful.
Background of the Proposal
On December 3, 2024, One Managed Investment Funds Limited, the responsible entity for the Fat Prophets Global Property Fund (FPP), received an unsolicited, incomplete, and non-binding merger proposal from Lanyon Asset Management. Lanyon is a major unitholder in FPP and has previously attempted to engage with the fund's management regarding strategic changes.
The proposal aimed to merge FPP with an AQUA quoted entity managed by Lanyon. However, the proposal was met with skepticism by Fat Prophets Funds Management, the investment manager of FPP. The proposal demanded a response within a tight timeframe of less than 72 hours, which raised concerns about its feasibility and intent.
Concerns Raised by Fat Prophets
The investment manager of FPP expressed several concerns regarding the proposal. Firstly, they believed that the proposal did not offer fair value to FPP unitholders. Additionally, the fees requested by Lanyon as part of the merger were considered unreasonable. The investment manager also highlighted a lack of alignment in investment strategy between FPP and the AQUA entity proposed for the merger.
Given these factors, the management of Fat Prophets concluded that there were no compelling reasons to present the proposal to FPP unitholders for consideration. The investment manager also noted that an independent expert would likely not deem the proposal 'fair and reasonable' for FPP unitholders.
Historical Context and Previous Attempts
Lanyon Asset Management has a history of attempting to influence the management and strategic direction of FPP. In 2022, Lanyon requisitioned an extraordinary general meeting with the aim of removing the current investment manager. However, this proposal was not approved by FPP investors, indicating a lack of support for Lanyon's approach among the broader unitholder base.
The rejection of the merger proposal is likely to maintain the status quo for FPP in the short term. The decision reflects the management's commitment to protecting unitholder interests and ensuring that any strategic changes align with the fund's investment strategy. This could reassure existing investors about the fund's governance and management integrity.
Investor Reaction:
Analysts may view the rejection as a positive move for FPP, as it demonstrates the management's focus on fair value and strategic alignment. However, some investors might be concerned about the ongoing tensions with a major unitholder like Lanyon, which could lead to future conflicts or proposals.
Conclusion:
Investors in Fat Prophets Global Property Fund should continue to monitor developments closely. The fund's management has clearly stated its priorities, and future proposals will likely be scrutinized with the same level of diligence. Staying informed on the fund's strategic direction will be crucial for making well-informed investment decisions.