- What Melcor Developments has offered $4.95 for each unit of Melcor REIT that it does not own
- Why The deal would bring the income property portfolio back under Melcor’s full ownership
- What next Shareholders must approve the deal
Melcor Developments has agreed to acquire the roughly 45% interest in Melcor REIT that it does not own for $4.95 per unit in cash.
The move aims to bring Melcor’s income property portfolio back under its full ownership. The offered price represents a 46% premium to the REIT’s Sept. 12 closing price, and the REIT’s board recommends in favor of the deal.
Melcor REIT owns 37 properties in Western Canada totaling roughly 3m sq ft.
The merger agreement calls for a 30-day go-shop period, starting on Sept. 12. The REIT can solicit third-party interest during that time. Melcor Developments will have the right to match any superior offer made.
Two-thirds of the REIT’s shareholders and holders of special voting units must vote in favor of the deal.
Once the deal closes, the REIT’s units will cease to be listed on the TSX. Melcor Developments also will cause the redemption of and pay out in cash all $46m of the REIT’s 5.10% convertible unsecured subordinated debentures maturing on Dec. 31.
CIBC Capital Markets is acting as exclusive financial advisor to Melcor, and Bryan & Co. is acting as legal counsel to Melcor. ATB Capital Markets is acting as strategic advisor to the independent committee of Melcor.
BMO Capital Markets is acting as exclusive financial advisor to the REIT, and Ventum Capital Markets is acting as independent financial advisor and independent valuator to the REIT’s independent committee.
DLA Piper (Canada) is acting as legal counsel to the REIT’s independent committee as well as legal counsel to the REIT in connection with the transaction.
Melcor Developments develops and manages mixed-use residential properties, business and industrial parks, office buildings, retail commercial centres and golf courses. It owns assets in Alberta, Saskatchewan, British Columbia, Arizona and Colorado.
