- FTSE 100 firm seizes opportunity
- Deal represents 21.8% premium
- Price close to last round of valuations
The wave of consolidation in UK commercial property rolls on with Urban Logistics REIT (SHED) recommending a cash and shares offer from FTSE 100 rival LondonMetric Property (LMP).
Shares in Urban Logistics gained 6p or 4% to 151.5p while LondonMetric shares were flat at 191p.
BIGGER IS BETTER
Last month, Urban Logistics confirmed press speculation it had received a preliminary approach from LondonMetric and said it was evaluating the offer, which consisted of 42.8p per share in cash, plus the 4.35p final dividend for the year ended in March, and 0.5612p in new LondonMetric shares.
At the time, based on the LondonMetric share price, the offer valued Urban Logistics at 145p per share or £675 million.
Based on last night’s closing price, and excluding the final dividend, the deal values Urban Logistics shares at 150.3p each, a premium of 21.8% to the undisturbed share price, and values the whole company at just under £700 million.
The deal also represents a discount of just 3% to NTA (net tangible assets) based on the valuations of both firm’s net assets as of 30 September 2024.
The combined group will be 89% owned by LondonMetric and will have a proforma market cap of £4.4 billion, making it one of the UK’s largest REITs and cementing its place in the blue-chip benchmark.
ACTIVIST PRESSURE
In the lead-up to the bid approach, Urban Logistics had been targeted by activist investor Achilles, managed by Harwood Capital, which sent a letter requisitioning a general meeting on behalf of several investors.
Achilles intended to call for the removal of Urban Logistics chair Nigel Rich, chief executive of the trust’s investment adviser Richard Moffitt and director Heather Hancock, with the aim of installing Achilles lead fund manager Robert Naylor as chair.
Prior to Achilles’ intervention, Urban Logistics had proposed moving from an external management structure to an internal one in order to reduce operating costs and thereby increase earnings as well as to align management’s interests with those of shareholders.
