👉 Background: Abacus Storage King is the ASX-listed company that operates under the brand Storage King — the self-proclaimed Kings of Storage, moving and probably bubble wrap too. Storage King has nearly 150 self-storage facilities and development sites, with the average customer (aka hoarder) sticking around for 3.4 years.

‍👉 What happened: In 2023, Abacus Property Group, which was the owner of Storage King, decided to demerge Storage King it into its own ASX listing. But since then, its share price had fallen more than 18%. So now Abacus Property Group has partnered with Public Storage, a New York listed company to try and buy back the whole of Abacus Storage King. The takeover offer is at $1.93 billion - which is more-than-26% premium to its pre-offer closing price.

‍👉 What else: The offer still needs to get approval from the Storage King board as well as the Foreign Investment Review Board. But given the offer price is below Storage King’s net tangible assets, some investors may push back.

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‍What's the key learning?

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‍💡Net Tangible Assets (NTA) is essentially the value of a company’s physical assets (like property) minus its liabilities. It is a common valuation tool used in property-heavy sectors like real estate or storage.

💡Investors look at NTA to understand what a company is worth on a “break-up” basis. In other words, what would it be worth it if all of its assets were sold and debts paid off? In Abacus Storage King’s case, its Net Tangible Assets is $1.60 per share, but the takeover group is offering $1.47 — that’s an 8% discount.

💡But NTA doesn’t always equal market value. If a business is underperforming, or it has limited future growth opportunities, investors may decide to sell at a slight discount. Because as the takeover group claims, a discounted exit is much better than a slow and painful decline.