Civitas agrees to ‘undervalued’ £485m takeover following wave of criticism from press and shortseller

BY:CHARLIE CONCHIE, City A.M. 9 MAY 2023:

London-listed social housing investor Civitas revealed it had struck an “undervalued” deal to sell itself to a Hong Kong property giant today, as it looks to escape a barrage of criticism from short sellers and the media.

Bosses at Civitas said this morning they had agreed to a £485m offer from Wellness Unity Limited, a company owned by Hong Kong property conglomerate CK Asset Holdings, and would now unanimously recommend the deal to shareholders.

Shares in the real estate investment trust (REIT) rocketed beyond forty per cent this morning after the announcement.

The proposed offer marks a 44.4 per cent premium on the firm’s share price on the 5th May but is well below the value of the firm’s sprawling portfolio of properties and the 104p per share price the firm floated at in 2016.

Bosses at Civitas said they had agreed to the “undervalued” offer amid a wave of “negative sentiment” towards the social housing sector and increasing scrutiny from the social housing regulator.

“Equity market sentiment to specialist supported housing has been poor, with ongoing negative commentary around the sector as a whole,” the firm said in the announcement today…

The issue had been fuelled by “an aggressive and vocal shortselling attack” on the firm from ShadowFall in 2021 which was widely covered by the media and “created further negative sentiment”, Civitas said.

Chair of the firm Michael Wrobel said the deal marked a good option for shareholders as the sector is rocked by a “number of challenges in sentiment” which the market was “unlikely to overcome”.

However, the offer was slammed by some analysts today. Head of investment companies at QuotedData – and Civitas shareholder – James Carthew, said the offer from CK Holdings was an “opportunistic bid” and investors should reject the offer.

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