Capital & Regional directors support NewRiver offer
Independent directors of Capital & Regional to recommend that shareholders vote in favour of the cash and share offer
25 September 2024 - 08:28
by Jacqueline Mackenzie and Jacob Webster
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Independent directors of Capital & Regional intend to recommend unanimously that shareholders vote in favour of the cash and share offer by NewRiver.
The directors were advised by Numis Securities and Stifel Nicolaus Europe.
On September 19, real estate investment trust (Reit) NewRiver announced its long-awaited offer to buy UK shopping centre owner Capital & Regional in a cash and share deal worth £147m (about R3.4bn).
Growthpoint, in its capacity as Capital & Regional’s largest shareholder, has given an irrevocable undertaking to vote in favour of the scheme. All Capital & Regional directors who held shares had also irrevocably undertaken to vote in favour of the deal, Capital & Regional said in a statement on Wednesday.
The NewRiver board intends to recommend that its shareholders vote in favour of the deal.
NewRiver has offered 31.25 pence in cash and 0.41946 NewRiver shares for each Capital & Regional share, implying a value of 62.5p per Capital & Regional share.
The offer comes nearly four months after Growthpoint first received a preliminary expression of interest from NewRiver on May 23.
Business Day at the time reported that the first deadline for NewRiver to announce a firm intention to make an offer or say it did not intend to make an offer was June 20. However, this was followed by three further extensions.
With an offer now on the table, NewRiver’s board is optimistic about the opportunity to build up the group’s portfolio after facing tough market conditions in recent years.
“Following a challenging period for the UK retail real estate sector, in which capital values have materially debased, with the MSCI UK shopping centres index declining by 53% between June 2019 and June 2024, the NewRiver Board believes the combination represents a unique opportunity to create a significantly enlarged portfolio at an attractive point in the market cycle,” the company said in a statement when it made the offer.
NewRiver’s offer would result in a combined retail portfolio with 47 assets valued at £889m and generating about £90m in annualised rent. The combined group would also have 84 assets under management, valued at £2.4bn.
The cash consideration payable by NewRiver will be funded from its existing cash resources, including the net proceeds of the placing where it raised £48.9m.
The boards of NewRiver and Capital & Regional said the combination had a strong strategic, operational and financial rationale.
The combination has high-quality, complementary assets. Capital & Regional’s portfolio comprises six community shopping centres predominantly located in London and southeast England, let to low-risk, essential and value-orientated retailers that are highly complementary to NewRiver’s existing portfolio.
Additionally, the combination will create an enlarged Reit with an enhanced equity market profile and a broader shareholder base, with shareholders benefiting from the potential for increased share liquidity and larger weightings in key indices.
The scheme is subject to shareholder approval from both groups at general meetings and requires 75% of shareholders to vote in favour of the deal.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Capital & Regional directors support NewRiver offer
Independent directors of Capital & Regional to recommend that shareholders vote in favour of the cash and share offer
Independent directors of Capital & Regional intend to recommend unanimously that shareholders vote in favour of the cash and share offer by NewRiver.
The directors were advised by Numis Securities and Stifel Nicolaus Europe.
On September 19, real estate investment trust (Reit) NewRiver announced its long-awaited offer to buy UK shopping centre owner Capital & Regional in a cash and share deal worth £147m (about R3.4bn).
Growthpoint, in its capacity as Capital & Regional’s largest shareholder, has given an irrevocable undertaking to vote in favour of the scheme. All Capital & Regional directors who held shares had also irrevocably undertaken to vote in favour of the deal, Capital & Regional said in a statement on Wednesday.
The NewRiver board intends to recommend that its shareholders vote in favour of the deal.
NewRiver has offered 31.25 pence in cash and 0.41946 NewRiver shares for each Capital & Regional share, implying a value of 62.5p per Capital & Regional share.
The offer comes nearly four months after Growthpoint first received a preliminary expression of interest from NewRiver on May 23.
Business Day at the time reported that the first deadline for NewRiver to announce a firm intention to make an offer or say it did not intend to make an offer was June 20. However, this was followed by three further extensions.
With an offer now on the table, NewRiver’s board is optimistic about the opportunity to build up the group’s portfolio after facing tough market conditions in recent years.
“Following a challenging period for the UK retail real estate sector, in which capital values have materially debased, with the MSCI UK shopping centres index declining by 53% between June 2019 and June 2024, the NewRiver Board believes the combination represents a unique opportunity to create a significantly enlarged portfolio at an attractive point in the market cycle,” the company said in a statement when it made the offer.
NewRiver’s offer would result in a combined retail portfolio with 47 assets valued at £889m and generating about £90m in annualised rent. The combined group would also have 84 assets under management, valued at £2.4bn.
The cash consideration payable by NewRiver will be funded from its existing cash resources, including the net proceeds of the placing where it raised £48.9m.
The boards of NewRiver and Capital & Regional said the combination had a strong strategic, operational and financial rationale.
The combination has high-quality, complementary assets. Capital & Regional’s portfolio comprises six community shopping centres predominantly located in London and southeast England, let to low-risk, essential and value-orientated retailers that are highly complementary to NewRiver’s existing portfolio.
Additionally, the combination will create an enlarged Reit with an enhanced equity market profile and a broader shareholder base, with shareholders benefiting from the potential for increased share liquidity and larger weightings in key indices.
The scheme is subject to shareholder approval from both groups at general meetings and requires 75% of shareholders to vote in favour of the deal.
With Jacob Webster
mackenziej@arena.africa
websterj@businesslive..za
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.