Following weeks of discussions, the boards of both companies confirmed in a stock exchange notice today (11 January) that for each LXi share held, shareholders will receive 0.55 new LondonMetric shares as part of a scheme of arrangement.
Based on the closing price per LXi share on 15 December of 99.5p, the offer represents a premium of about 9%, and a 13% premium to the volume weighted average closing price per LXi share for the one-month period to 15 December of 95.7p.
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Once the merger is complete, existing LondonMetric shareholders will hold about 54% and LXi shareholders will hold about 46% of the enlarged issued share capital of LondonMetric.
The boards said the combined group will have EPRA net tangible assets of about £4.1bn, becoming the fourth largest UK REIT and providing “better” access to capital through greater scale, lower cost base and increasing share liquidity.
“The board of LXi would like to thank the LXi REIT Advisors team for the important contribution they have made to the company’s success,” said LXi chair Cyrus Ardalan.
“The merger will position the combined group for continued growth and outperformance and the delivery of reliable, sustainable and progressive dividends through the cycle, thereby underpinning superior total shareholder returns.”
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Andrew Jones, chief executive of LondonMetric, said the transaction underscores the firm’s ambitions to leverage its management platform and access “exciting new opportunities” across the UK real estate market.
“Our team is strongly aligned to shareholders and has deep real estate experience with a strong track record for capital allocation, asset recycling and active management,” he said.
“This strategy will not change and our proactive culture will remain intact, and whilst we will undoubtedly look to reposition parts of the portfolio, this will be more of a tilt than a pivot with logistics remaining our strongest conviction call for organic growth.”
The takeover offer will require LXi and LondonMetric shareholder approval at upcoming general meetings, with the LXi vote requiring the approval of 75% of votes cast for the resolution to pass, and a simple majority for LondonMetric.
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Artemis Investment Management, which owns 7.4% of LXi shares, has already submitted a letter of intent to vote in support of the scheme.
A scheme document with further information about the merger and outlining the dates of the general meetings will be published within the next 28 days, and it is expected that the scheme will become effective by 31 March 2024, subject to conditions.
Following completion of the merger, it is expected that Nick Leslau will join the LondonMetric board as a non-executive director.
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