SYDNEY (AFP) - Australian property giant Westfield Group announced a 585 million pound bid to acquire British shopping center operator Chelsfield, a move seen as likely to spark a bidding war with rival Multiplex.
Both Australian groups are eager to boost their market share in Britain as opportunities for expansion dry up in the Australian market and US ventures are seen as too expensive, analysts said Thursday.
Westfield's offer involves a cash bid for Duelguide, a holding company formed in April as a vehicle for a management buyout of Chelsfield.
Westfield, Australia's largest listed shopping centre owner by market value, said its bid was subject to certain conditions including approval from Duelguide directors and commitments for at least 50.1 percent of the shares in Duelguide.
Multiplex in January took a 30 million pound (53.7 million US dollars) stake in Duelguide ahead of the British firm's successful 2.0 billion pound deal to buy out Chelsfield, a major shopping center owner and developer with gross assets of more than 1.5 billion pounds.
Multiplex now holds 7.8 percent of the shares and bonds in Duelguide.
Chelsfield owns one of Britain's leading shopping centers, Merry Hill near Birmingham, and has an interest in a number of large-scale development projects.
These include the White City development which, when completed, is expected to be the largest retail operation in central London.
Westfield chairman Frank Lowy said his company recognised that its bid for Chelsfield "represents a premium price, but we believe we can create significant value through the application of our management and development expertise to the Chelsfield properties".
"The UK shopping centre market is under-developed relative to the United States and Australia and if the bid is successful it would increase Westfield's presence in the UK substantially," he said.
The Westfield initiaive comes at a delicate time for Multiplex which earlier this week announced a 1.33 billion Australian dollar (923 million US dollars) takeover of office property trust Ronin Property Group.
Analysts said the British market offered opportunities for both firms and they expected Multiplex to respond to Westfields bid.
"The retail property market is improving in the UK and yields are firming like they have in Australia," CommSec analyst Quentin Velleley said.
"Multiplex can bid higher -- you would think that they would be preoccupied with what's happening with Ronin -- but they have made statements that they are in play," he said.
Multiplex did not comment on the matter but earlier this week said it was "continuing to evaluate alternative options for its investment in Duelguide".
Australian media reported that Multiplex was believed to have previously approached Chelsfield with increasing offers beginning at 485 million pounds and rising to 515 million pounds. Analysts say a new competing bid could reach 600 million pounds.
Standard and Poor's Ratings Services reacted to the Westfield bid by placing its A/A-1 ratings on the company on CreditWatch with negative implications.
SP said its move reflected concern over a likely increase in debt required for the acquisition, uncertainty over the eventual price and the stability of cashflows from Chelsfield's assets.
Westfield Group, formed from the July merger of Westfield Holdings and its property trusts, said it had substantial capacity to fund the cash acquisition of Duelguide through debt issues.
Westfield securities closed down two cents at 15.21 dollars Thursday after hitting a session high of 15.35, while Multiplex stapled securities closed down three cents at 3.78.