NewRiver REIT has agreed the terms of its £147m takeover of Capital & Regional.
The cash and share offer will see Capital & Regional shareholders receive 31.25p in cash and 0.41946 NewRiver shares for each Capital & Regional share they hold.
The takeover will be funded from NewRiver’s existing cash resources, including the net proceeds of a £48.9m share placing it completed last week.
Lynn Fordham, chair of NewRiver REIT, said: “This is a compelling transaction which has a strong strategic, operational and financial rationale at an attractive point in the market cycle. Combining the complementary retail portfolios of NewRiver and Capital & Regional will create an enlarged specialist REIT with a circa £0.9bn portfolio of high quality, well-located assets, including 29 community shopping centres and 13 retail parks across the UK and Northern Ireland.
“Both portfolios share a focus on convenience, value and essential goods and services, and are well positioned to benefit from future rental growth, supported by NewRiver’s retail asset management platform.
“In addition to providing enhanced scale with total assets under management, including NewRiver’s existing Capital Partnerships business, of approximately £2.4bn, the transaction will offer substantial cost savings and significant earnings accretion, enhancing the combined group’s ability to pay a materially higher, covered dividend, whilst increased scale should also benefit future share liquidity for shareholders.”
David Hunter, chair of Capital & Regional, added: “The combination of these two complementary portfolios provides our shareholders with both upfront liquidity through the cash element and equity exposure to an enlarged UK REIT, offering increased share liquidity from a broader shareholder base.
“In addition, the combination will result in further asset and tenant diversification and lower operating costs than would otherwise be achieved by Capital & Regional on a standalone basis. Capital & Regional shareholders will also benefit from exposure to a business with a £0.9bn property portfolio, a strong balance sheet and a combined track record of sustained dividend growth, providing an excellent opportunity to deliver ongoing value for shareholders.
“When weighing the standalone prospects of Capital & Regional against the combination, and in light of Growthpoint’s intentions regarding its majority stake, we believe this offer is in the best interests of Capital & Regional shareholders and are pleased to unanimously recommend it to them.”
