Tritax Big Box agrees takeover of UK Commercial Property to create £4bn REIT

investmentweek.co.uk:

The merged entity would be externally managed by Tritax, with cost savings coming from the unification of management under Tritax Management.

In a stock exchange notice today (12 February), the trusts said the net asset value for NAV all-share deal values UKCM at £924m, a 10.7% premium to the closing price last Friday (9 February).

As part of the deal, UKCM shareholders will receive 0.444 new ordinary BBOX shares for each UKCM share held. The possible offer, subject to shareholder approval, would result in UKCM shareholders holding approximately 23.3% of the combined entity.

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The merged entity would be externally managed by Tritax, with cost savings coming from the unification of management under Tritax Management.

Both the Tritax and UKCM boards said the offer has «compelling strategic and financial rationale», bringing together complementary logistics orientated portfolios worth a combined £6.3bn with an income focus.

The move follows on from collapsed merger talks between Picton Property Income and UKCM last November, after UKCM's largest shareholder, Phoenix Life, said it would not back the deal on the proposed terms. 

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Non-binding letters of intent have been received by the two largest shareholders, Phoenix and Investec W&I, who hold a combined 56.5% of UKCM's issued share capital. 

Phoenix's letter of intent states that the firm plans, under the condition that BBOX makes a formal offer with terms at least as favourable as the exchange ratio, to commit to an irrevocable undertaking, or binding agreement between BBOX and Phoenix.

In a research note, Stifel analysts