Icade to merge with subsidiaries, gain SIIC status

French property developer Icade said it plans to merge with its four majority-owned property subsidiaries to allow it to acquire SIIC status, the French equivalent of a real estate investment trust, already enjoyed by those subsidiaries. The new SIIC status would be backdated to 1 January 2007, allowing Icade to add EUR 853 mln to its net asset value. The new group, which will still be called Icade, will enjoy an estimated net asset value of EUR 4.6 bn at end-June.

Icade currently holds 86.2% of the share capital of EMGP, 92.9% of Fonciere des Pimonts, 99.6% of Patrimoine and 100% of Fonciere Publique. Under the terms of the agreement, the EMPG property development unit will absorb the other entities, swapping 1 of its shares for 2 Icade shares; 5 shares for 3 Fonciere des Pimonts shares, 1 share for 7 Patrimoine shares and 1 share for 7 Fonciere Publique shares. Upon completion of the mergers, the share capital of absorbing company EMGP will be increased by 35.7 mln shares. The companies are expected to approve the deal in November.

Following the transaction, Icade's majority shareholder, the state-owned Caisse des Depots et Consignations, will see its stake fall to 61.6% from 64.7%.

Aside from allowing Icade to take on SIIC status, the company said that the merger is also designed to strengthen Icade's integrated company business model; improve implementation of operational synergies and optimise investment and financing policy. Icade also says it will benefit from greater flexibility of property management, increase the liquidity of its stock and eliminate costs related to the existence of several listed entities within the group.

The company said the exit tax based on Icade's asset value as of 1 January 2007 and payable over four fiscal years is estimated at EUR 227 mln. In exchange, potential tax savings are expected to reach at least EUR 55 mln per year over the next 5 years.