Kennedy Wilson Holdings (KW) has announced a new merger offer for Kennedy Wilson Europe (KWE), adding a significant cash element, following pressure from key shareholders and advisor Soros Fund Management.
The original offer, proposed on 24 April, was valued at £11.74 (€13.31) per KWE share when announced, with each KWE shareholder receiving 0.667 in new KW US shares. However, the KW US share price subsequently fell from $22.50 (€20.07) to yesterday’s close of $19.55 (€17.44), revaluing the offer to KWE holders at £10.30 (€11.68).
Last month, the weakening valuation saw a number of key shareholders outline their concerns with the deal, culminating in a letter from Quantum Strategic Partners Ltd on 2 May.
Soros Fund Management, founded by business magnate George Soros (pictured), is the primary advisor for the Quantum Group of funds.
'The new KWE merger offer has a much wider support base than the original offer and has a much higher chance of success,' Irish broker and advisor Goodbody reported in a briefing note. 'The new offer reflects a 6% discount to FY16 NAV, versus 3.4% as per the original offer. We expect this new offer proposal to be approved by KWE shareholders.'
The new offer adds a cash component of £5.50 (€6.24) (300p paid by KW and 250p paid by KWE) along with 0.3854 new KW US shares. This represents an offer of £11.45 (€12.98) per share, a significant improvement on the implied offer price of £10.30 (€11.68), though below the original offer price at the time of £11.74 (€13.31).
'Support for the new offer is significant. KW had received additional irrevocable undertakings from Franklin Templeton Institutional and Quantum Strategic Partners Ltd, the two largest holders who control just under 22%. This is also supported by a further 14% getting them to 36%,' confirmed Goodbody.
The merger is now expected to close in the fourth quarter of 2017, rather than the third quarter, as originally planned.
