Warner Estate Holdings has made a bid to takeover JS Real Estate for £114m ahead of its April conversion into a REIT.
The recommended cash offer, which valued JS shares at 700p each, represents a discount of around 10.3% to yesterday’s closing price of 780p a JS shares.
JS Real Estate said the takeover by Warner was a better option than converting to a REIT and Warner’s offer fully reflected the value of its assets. It said it was prepared to back the discounted offer because its stock had risen 50% in the past few months which was unsustainable.
‘The recent increase in JS’s share price has occurred on very low trading volumes and transactions at recent levels have been for small numbers of shares,’ said Chairman Stephen Mulliner. ‘JS directors do not believe that the recent price levels represent a realistic indication at the level at which large shareholdings could be traded.’
In a separate statement, Warner said it plans to raise £21.4m by placing 2.52m shares at 850p each which will partly be used to fund its offer for JS Real Estate. It shares fell 3.5%
Warner executive chairman Philip Warner said: ‘Around 40% of the JS portfolio is located in St John's Wood High Streetwhich provides good asset management opportunities. Our offer enables JS shareholders to realise full value for the portfolio through our ability to take account of the Capital Gains Tax which will be eliminated on conversion to REIT status."
Oriel Securities advised JS.