4th Sep 2024 13:15
(Alliance News) - Tritax EuroBox PLC could attract further bid interest, analysts on Wednesday said, although the combination with Segro was viewed positively.
On Wednesday, Tritax EuroBox accepted a bid from fellow property investment firm Segro, one of a number of approaches for the distribution centre specialist.
Under the deal Tritax EuroBox shareholders will receive 0.0765 of a new Segro share for every one held in Tritax EuroBox.
In addition, Tritax EuroBox shareholders will receive a dividend of around 1.05 pence per share in respect of the quarter to September 30.
The all-share deal values each Tritax EuroBox share at 68.4p, based on Segro's closing share price of 880.00p on Tuesday.
Shares in Tritax Eurobox were up 0.9% at 67.10 pence in London on Wednesday. Segro fell 2.5% to 857.80p.
At Segro's Tuesday price, the deal values Tritax EuroBox at GBP552 million. Including debt, the deal implies an enterprise value of around GBP1.10 billion.
The move by Segro comes after Brookfield Global Asset Management said in June that it was in the early stages of considering a cash offer for Tritax EuroBox.
Tritax EuroBox then said in July that it had attracted interest from other possible suitors, as well as Brookfield.
Tritax EuroBox said it had "carefully reviewed and negotiated a range of proposals", which included offers in shares or cash.
Chair Robert Orr said the offer comes against the background of a "difficult macroeconomic environment for the property sector".
He said: "The transaction with Segro represents a compelling opportunity for Tritax EuroBox shareholders to achieve a significant and immediate uplift in the value of their investment and stronger total shareholder returns."
Segro Chief Executive David Sleath said: "This transaction offers the opportunity to acquire a high-quality portfolio of big box warehouses in core European markets which would complement and enhance our existing assets.
"The management of the portfolio will be internalised on completion, taking advantage of economies of scale from our existing, locally-based operating platform."
Segro expects the deal to be accretive to both EPRA net tangible asset per share and adjusted earnings per share immediately following completion.
The offer has the backing of Tritax Eurobox directors representing 0.8% of Tritax shares.
Shore Capital's Andrew Saunders thinks the deal looks an "attractive fit" portfolio-wise, giving cost savings and providing Segro increased scale in highly complementary European industrial & logistics assets.
Stifel explained that Tritax Eurobox has traded at a perpetual discount, largely as a result of being sub-scale.
"This had impacted both cost ratios and dividend coverage. Although some issues had been addressed, the lack of scale had led the board to explore potential options for realising value. The quality portfolio attracted considerable interest from a number of parties leading up to this all-share offer from Segro."
Peel Hunt thinks there remains a possibility that Brookfield or another party could make an alternative cash offer, which some shareholders may prefer, and the around 16% discount to EPRA net tangible asset "perhaps offers a pricing window to do so".
The broker notes Segro expects the transaction to be accretive to EPRA NTA per share and EPS, but believes this is likely to be relatively "modest".
By Jeremy Cutler, Alliance News reporter
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