TORONTO (Reuters) – Teranet Income Fund (TF_u.TO), which holds a monopoly on the electronic land registry in the Canadian province of Ontario, said on Wednesday it withdrew its opposition to an C$11-a-unit hostile bid by Borealis Infrastructure Management because of market conditions.
Instead, the fund has left it up to unitholders to make their own decision on the deal, valued at C$1.7 billion. Having reviewed its options and after running an extensive auction process, Teranet said it believed a superior offer was unlikely to surface before the Borealis bid expires, which had been due to occur on Oct. 17.
After markets closed on Wednesday, Borealis said it will extend its offer until 5 p.m. (2100 GMT) on Oct. 31 to allow other conditions of its offer to be met or waived.
Teranet said that one director owning 541,166 units advised the board he planned to tender his units to the Borealis offer.
The units closed down 50 Canadian cents at C$10.00 on the Toronto Stock Exchange on Wednesday, or C$1.00 below the Borealis offer price.
“Unitholders should also be aware that if unitholders do not tender, and the Borealis offer is withdrawn and no other offer is forthcoming, units of the fund may trade at a significant discount to the current market price,” the trust said in a statement.
Teranet also said that it has waived the unitholder rights plan, and was prepared to help Borealis in obtaining the required consents from the province of Ontario.
Teranet units had generally been on a decline since December, but started to climb in August. A sharp increase in trading activity prompted the fund, which was coveted for its cash flow, to state that it was not in negotiations to sell.
Borealis. an investment arm of the Ontario Municipal Employees Retirement System, made its formal bid last month. Teranet initially rejected the bid as “inadequate”, and said Borealis had made noises about offering C$12 per unit. ($1=$1.18 Canadian)
(Reporting by Ka Yan Ng and Lynne Olver; Editing by Peter Galloway)