The two managers of Singapore-listed ESR-REIT, e-shang Redwood (ESR) and Viva Industrial REIT (VIT), have agreed to a SDG1.5bn (€949m) following exclusive talks in January.
The merged entity, which will become the fourth-largest industrial vehicle in Singapore, will have a combined SGD3bn in assets.
As part of the merger, ESR-REIT will acquire all of VIT’s securities, and in return issue new ESR-REIT units to VIT security-holders.
The parties said VIT shareholders will get 10% in cash and 90% in new ESR-REIT shares, to be issued at SGD0.54.
The proposal involves a cash consideration of SGD936.7m and refinancing of VIT’s existing SGD525m debt.
Key management executives and board members of VIT REIT management will join the ESR-REIT team.
The parties said the enlarged trust will have opportunities to acquire ESR’s visible pipeline of assets for scalable growth and overseas expansion.
ESR, backed by Warburg Pincus, has developments in China, South Korea, and Japan.
Adrian Chui, ESR-REIT’s chief executive officer and executive director, said: “Size does matter for REITs. This merger will be a milestone transaction that will create a portfolio that is stronger, more resilient and better-diversified.”
Wilson Ang, chief executive officer and executive director of VIT, said the merger will be transformational for both VIT and ESR-REIT.
All approvals are expected to be cleared for the trust scheme of arrangement to take effect in September when VIT will be delisted.