31st Jan 2008 17:13
Grainger PLC31 January 2008 31 January 2008 GRAINGER PLC ("GRAINGER") GRAINGER ANNOUNCES ACQUISITION OF LISTED GERMAN RESIDENTIAL PROPERTY COMPANY FRANCONORHEINMAIN AG Grainger plc, the UK's largest quoted residential property company, announcesthat it has exchanged contracts with Franconofurt AG ("Franconofurt") to acquirea 54% shareholding in FranconoRheinMain AG ("FranconoRheinMain"), a residentialproperty company listed on the Frankfurt Stock Exchange. The purchase price forFranconofurt's shares in FranconoRheinMain is €1.50 per share. Grainger hassimultaneously announced a tender offer to acquire the remaining shares ofFranconoRheinMain. The tender offer price will be the minimum price required byGerman securities law and is expected to be €1.76 to €1.80 per share. The totalconsideration for the acquisition of FranconoRheinMain is therefore expected tobe €45.3 million to €45.8 million in cash (assuming 100% acceptance of thetender offer) which will be satisfied from Grainger's existing resources. FranconoRheinMain has assembled a portfolio of approximately 2,300 units througha targeted acquisition strategy which has involved stockpicking individualassets. The portfolio primarily comprises apartments and houses in theattractive Rhine-Main and Rhine-Neckar regions of Germany. The market value ofFranconoRheinMain's portfolio as at 30 September 2007 was approximately €117million. For the nine months to 30 September 2007, FranconoRheinMain reportedpre-tax profits of approximately €8 million. As at 30 September 2007,FranconoRheinMain had net assets of approximately €49.8 million. Grainger already owns over 4,500 residential units in Germany with a marketvalue (as at 30 September 2007) of €346 million. Grainger's existing units arelocated in or around the major cities of Munich, Stuttgart, Dusseldorf andBerlin. Currently Grainger's local office in Mannheim provides specialist assetmanagement services to these properties. Following the acquisition ofFranconoRheinMain, Grainger will have an interest in approximately 6,800 unitsin Germany with a market value of close to €500 million. The acquisition ofFranconoRheinMain is expected to have a positive effect on Grainger's net assetvalue and earnings per share. FranconoRheinMain employs six full-time staff based in Frankfurt. Grainger'steam will work in conjunction with FranconoRheinMain's management to unlockmaximum value from the assets through the deployment of Grainger's in-houseasset management capabilities, which it has been applying to its existing Germanportfolio since it entered the market in late 2005. In addition, the enlargedteam will work together to further expand Grainger's presence in the Germanmarket. The tender offer will be conditional on receiving acceptances representing 70%of FranconoRheinMain shares (including the shares to be acquired fromFranconofurt). The acquisition of Franconofurt's shares is conditional on thetender offer being successful. Details of the terms and conditions of thetender offer will be contained in an offer document which will be posted toFranconoRheinMain's shareholders in due course. The acquisition and tenderoffer are being made by subsidiaries of Grainger. Rupert Dickinson, Chief Executive of Grainger, commented: "FranconoRheinMain represents an excellent strategic fit with our existingportfolio in Germany and provides a strong platform for our continued growth inthis market. Through this corporate acquisition, we are gaining ownership of ahigh quality portfolio on attractive terms, which suits our investment profile,both in terms of assets and location." Quinton Hill-Lines, Grainger's Director of Corporate Development and Funds,added: "We are confident that we can generate competitive returns for our shareholdersby applying our specialist asset management skills to FranconoRheinMain'sportfolio. In addition, we continue to see considerable demand forco-investment opportunities from investors in our existing funds and we areexploring ways to extend this model across our portfolio." For further information: Grainger plcRupert Dickinson/Quinton Hill LinesTel: +44 (0) 20 7795 4700 Lazard & Co., LimitedWilliam Rucker/Patrick LongTel: +44 (0) 20 7187 2000 Financial DynamicsStephanie Highett/Dido Laurimore/Jamie RobertsonTel: +44 (0) 20 7831 3113 Notes to Editors Grainger plc, listed on the FTSE-250 index, is the UK's largest quotedresidential property owner, with over 18,000 units under management across theUK and in Germany. Grainger's integrated business model, which has been adaptedand improved over its long history, includes investing in and managing assetsheld under regulated tenancies and assured shorthold tenancies, development ofresidential-led mixed-use schemes and the management of the UK's largestmarket-rented residential fund. Lazard & Co., Limited is acting for Grainger and no one else in connection withthe acquisition referred to in this announcement and will not be responsible toany other person for providing the protections afforded to clients of Lazard &Co., Limited or for providing advice in relation to the acquisition referred toin this announcement. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Grainger plc