Federation Centres has sold its 50 per cent interest in the Karingal Hub shopping centre in Frankston, Victoria after an undertaking given to the Australian Competition and Consumer Commission.
Co-owner ISPT will pay $115 million to Federation Centres and the sale is expected to settle later this month, the company said in a statement. The sale represents a 6.5 per cent premium to book value.
The ACCC last month cleared a merger between Federation Centres and Novion Property Group, on the basis that the duo would divest a shopping centre in the Frankston area.
Without the divestment, the merger would substantially lessen competition in the region, where Federation had invested in the Karingal Hub while Novion has the Bayside shopping centre, according to the consumer watchdog.
Federation will continue to manage Karingal for a transitional period of up to six months.
Implementation of the Federation-Novion merger is expected to take place on June 11. The merged entity will be the second largest owner of shopping centres in Australia.