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Industrials REIT urges shareholders to approve Blackstone offer

9th May 2023 13:50

(Alliance News) - Industrials REIT Ltd said on Tuesday it recommended to its shareholders the offer by Blackstone Inc as its shares traded at a discount and it faced volatile market conditions that made capital raising difficult.

In a letter to its shareholders, Non-Executive Chair Richard Grant wrote on Tuesday the board unanimously recommended that its shareholders vote in favour of the proposed acquisition at the court-sanctioned meeting and approve the deal at the general meeting.

Under the terms of the acquisition, Sussex Bidco LP will buy the London-based real estate investment trust for 168 pence per share.

The Jersey-based Sussex Bidco was formed on March 24 for the purposes of the acquisition and is an entity owned indirectly by investment funds advised by Blackstone.

Industrials REIT said the offer represents a premium of 42.4% to the closing price of 118.0p on March 31, being the last business day prior to the commencement of the offer period.

In London, shares in Industrials REIT were virtually flat at 166.57 pence each on Tuesday. They remained unchanged at ZAR39.00 in Johannesburg.

Industrials REIT said the acquisition values the entire issued and to be issued share capital of the group at about GBP511.2 million on a fully diluted basis.

Blackstone has said the total enterprise valuation, including debt and other liabilities, is GBP700 million.

To become effective, the deal requires the shareholder approval at the court meeting convened on May 31 and the passing of the resolution to be proposed at the general meeting to be held on the same day.

The transaction also requires the sanction of the court at the court hearing, set for June 20.

If all go according to plan, the cancellation of listing of Industrials shares on the London Stock Exchange will take place on June 22. The stock will be delisted from the Johannesburg Stock Exchange on June 27.

In the letter that indicated the company considered the offer "fair and reasonable", Grant said the final offer of 168 pence per Industrials share comes after its board received and rejected multiple proposals from Bidco over a period of a few weeks.

In arriving at its recommendation, the board believes that the acquisition is in the best interests of Industrials shareholders by significantly accelerating the value that could be realised by Industrials independently, the chair said.

He said the group's strong financial and operational performance had not been reflected in the current share price, with a significant de-rating experienced over the last year driven by the inflationary and higher interest rate environment.

"Whilst the Industrials board remains confident in Industrials' strategy and continues to believe that Industrials is well positioned to succeed as an independent business, it has also considered the medium-term risks posed by the uncertainty in the current economic environment," Grant said.

By Artwell Dlamini, Alliance News reporter

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