The manager of ARA LOGOS Logistics Trust (ALOG) has announced on Jan 22 that ESR-REIT will pay a higher scheme consideration in relation to the proposed merger between the two REITs by way of a trust scheme of arrangement.
ESR-REIT will now pay 9.7 cents in cash for each ALOG unit, and the rest through the allotment and issue of 1.7729 new ESR-REIT units (the consideration units) at an issue price of 49.24 cents per consideration unit.
Previously the scheme consideration comprised of 9.5 cents in cash, and the rest in units through the allotment and issuance of 1.6765 new ESR-REIT units at an issue price of 51 cents for each consideration unit.
This revised scheme consideration represents an increase of 2.1% in cash consideration and 5.8% in consideration units for ALOG unitholders.
Based on the one-month volume-weighted average price (VWAP) for ESR-REIT units, the illustrative value of the revised scheme consideration is 93.32 cents, which represents an increase of 5.3% when compared to the original scheme consideration on a like-for-like basis.
The historical pro forma distribution per unit (DPU) accretion to ALOG unitholders increases from 8.2% to 12.8%, while the historical pro forma net asset value (NAV) per unit accretion to ALOG unitholders increases from 2.2% to 5.3%
See also: Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
According to ALOG, the revised scheme consideration represents a 37.6% premium to ALOG’s NAV (as of Sept 30, 2021) which is the highest premium paid for any precedent S-REIT merger and S-REIT privatisations.
“The revised offer reflects ESR-REIT’s confidence in merging with ALOG to create a leading New Economy APAC S-REIT with a trajectory to supercharge growth. With this revised offer, the attractiveness of the proposal is further enhanced,” says Karen Lee, CEO of ALOG’s manager.
In view of the revised scheme consideration, ALOG will be deferring the EGM and scheme meeting in relation to the merger scheduled on Jan 27 to a future date, which will be announced in due course.
Units in ALOG up 0.56% 89.5 cents on Jan 21, while units in ESR-REIT closed flat at 47 cents.
