Bidding war hots up for Tritax EuroBox
Tritax EuroBox has received a cash offer for the company from Canadian private equity giant Brookfield that usurps SEGRO’s bid for the company.
Brookfield’s bid is 69.0p per share (equivalent to 82.4 cents at the current exchange rate) and values Tritax EuroBox at around £557m (which based on Tritax EuroBox’s net debt implies an enterprise value of £1,102m).
This represents a premium of 6% to the implied value of the SEGRO offer of 65.1 pence as at 9 October 2024.
At the date of the SEGRO offer, on 3 September, the implied value stood at 68.4p. Since announcement, the implied value at market close has ranged between a high of 70.7p (on 13 September) and low of 64.6p (on 8 October).
Tritax EuroBox’s board noted that while the two offers are now similar, a cash offer from Brookfield would provide increased certainty for shareholders as compared to continued market risk between now and completion for the SEGRO offer.
Accordingly, the board has withdrawn its recommendation for the SEGRO offer, and is instead recommending unanimously that Tritax EuroBox shareholders vote in favour of the Brookfield bid.
The offer price also represents:
- a premium of 28% to the closing price of 53.8p per Tritax EuroBox share on 31 May 2024 (the last business day prior to the commencement of the offer period);
- a discount of 12% to Tritax EuroBox’s last reported IFRS NAV per share of 93.9 cents as at 31 March 2024, or 7% to Tritax EuroBox’s last reported GAV of €1,409m as at 31 March 2024; and
- an implied topped-up Net Initial Yield of 5.1%.
What Brookfield says
Brookfield is an experienced and knowledgeable investor in European real estate markets, with a clear track record of investment in logistics-focused real estate assets.
It has for some time tracked and admired the logistics portfolio that the management team of Tritax EuroBox has built over recent years under the guidance of the board of Tritax EuroBox. Brookfield believes that the high-quality portfolio of assets that Tritax EuroBox has assembled fits well with its diverse global logistics portfolio which currently covers over 85 million square feet of space.
Brookfield also notes that, since its IPO, Tritax EuroBox has traded at a persistent discount to the value of its IFRS NAV and EPRA NDV, which has limited its ability to grow, in particular from further equity capital raises. Brookfield intends to actively manage the Tritax EuroBox portfolio within its broader European logistics platform. Brookfield believes that bringing Tritax EuroBox under private ownership will both better position it for further investment into existing assets, coupled with the benefits that accrue from being part of a scaled, better capitalised and actively growing real estate platform.
As a result, Brookfield believes that the acquisition price per Tritax EuroBox share will provide a compelling opportunity for Tritax EuroBox shareholders to realise certain value in cash for their shares at a premium to both the trading price on the undisturbed date as well as the uncertain value implied by the SEGRO offer.
What now?
A general meeting will be convened for shareholders to vote on the Brookfield offer. It needs 75% of votes in favour to be passed.
In the meantime, we await SEGRO, or another party, to make an announcement and perhaps an improved offer.