French listed office property group Gecina has launched an offer worth over €1.5 bn for smaller office landlord Fonciere de Paris, countering a previous bid by rival Eurosic.
Gecina, which recently sold its healthcare portfolio for €1.35 bn in order to focus on Paris offices, is offering €150 in cash per each FdP share, about 10% more than Eurosic's offer of €145 apiece. Alternatively, the company is offering six Gecina shares for every FdP share, or a 12% premium on Eurosic's offer.
Eurosic has already built up a 27% stake and launched a public tender offer for FdP, which owns a €2.6 bn portfolio focused on prime assets in central Paris and the Western Crescent. The company's shares closed at €136 on the day prior to the announcement.
In a statement, Gecina said it believes it is making a ‘simple, clear and attractive offer, providing Foncière de Paris’ shareholders with either immediate monetisation or the opportunity to become shareholders of the largest office property company in Europe’.
‘The combination is in line with Gecina’s strategy to reinforce its leadership in prime Paris offices,’ it said, adding that the transaction also offers ‘significant value creation potential for Gecina’s shareholders, as it is strongly accretive to Recurring Net Income per share from day one’.
The offer is conditional upon an acceptance level of over 50% of FdP’s share capital and voting rights.
‘The proposed acquisition of Foncière de Paris is a unique opportunity for Gecina’s shareholders,’ said Gecina's chairman Bernard Michel. ‘It is perfectly in line with the Group’s repositioning strategy and will create substantial value.’
Philippe Depoux, Gecina’s Chief Executive Officer, added: 'At the beginning of 2015, we announced an ambitious strategic repositioning in order to further strengthen our leadership in prime office property, particularly in Paris. Today we are seizing the opportunity to accelerate the implementation of this strategy, by proposing the acquisition of a company holding a high-quality asset portfolio, presenting strong geographical fit with Gecina’s own assets.’
FdP's assets are ‘highly complementary with Gecina’s, offering access to central and attractive areas of Paris (notably the 6th, 7th, 9th and 10th districts) where Gecina currently has a limited footprint,’ added Depoux.
Gecina's offer values FdP’s office portfolio at around €7,200 per m2, reflecting an estimated yield of around 5%.
Gecina said it intends to maintain a leverage ratio post transaction in line with its target LTV ratio of 40%. The transaction is fully financed through a dedicated bank credit line and the proceeds from the divestment of the healthcare portfolio.
