Board of listed developer to recommend sale to shareholders
US fund management giant Blackstone has formally issued a 拢1.2bn bid for listed housing and logistics developer St Modwen, two weeks after the firms revealed they were in discussions over a deal.
The offer, of 542p per St Modwen share, is being unanimously recommended to shareholders by the board of St Modwen, with Blackstone also having already received the support of another major shareholder.
The deal is likely to see 拢342m turnover St Modwen鈥檚 logistics arm merged in with Blackstone鈥檚 existing pan-European logistics business Mileway and significantly expanded, while the 1,000-home a-year housing business is likely to continue on its current growth trajectory.
Danuta Gray, chair of St. Modwen, said the board had initially rejected Blackstone鈥檚 advances, and that St Modwen鈥檚 financial position meant it had been able to 鈥渆valuate today鈥檚 recommendation from a position of strength.鈥�
The 拢1.2bn offer is 21.1% higher than the value of the business on the day the , and a third over the average share price in the previous three months.
Gray said: 鈥淔ollowing careful consideration we believe this offer is in the best interests of St. Modwen shareholders and significantly accelerates the value that could be realised by St. Modwen if it were to remain independent.
鈥淎dditionally, the board is reassured by Blackstone鈥檚 views and approach to investing in the business and supporting our people.鈥�
If agreed by shareholders, the deal is set to go ahead in July, the firm said.
It is understood that while the logistics business is likely to be merged in to Blackstone鈥檚 existing operation, there are no plans at this stage to combine St Modwen Homes with Blackstone鈥檚 affordable housebuilding operation, Sage Housing.
St Modwen already has a plan to grow completions from the current level to 1,500 homes a year by 2023 and it is expected that Blackstone will support this expansion. However, it is not clear if the firm intends to accelerate growth in the housing business.
The offer statement said: 鈥淚n order to maximise St. Modwen Homes鈥� full potential and achieve management鈥檚 objective of accelerating growth and operational efficiencies through scale, Bidco believes that St. Modwen Homes would benefit from the incremental growth and capital investment opportunities that private ownership can bring.鈥�
The offer, formally tabled by a newly created Bidco company controlled by funds managed indirectly by Blackstone, sets out that Blackstone believes it can increase the average annual return of the business from 6-6.3% over the last four years, to between 9-10% in the medium term.
In total, the offer statement said Blackstone had received undertakings by owners of 6.59% of St Modwen shares to support the offer.
James Seppala, head of Blackstone Real Estate Europe, said: 鈥淥ur strong conviction in the UK, together with St. Modwen鈥檚 high-quality asset base, its team, and its operational capabilities, give us confidence we can further build on the company鈥檚 successes. We look forward to working with the talented team at St. Modwen in the years ahead.鈥�
No comments yet