STE board backs €300m bid by French insurer

French REIT Société de la Tour Eiffel is recommending shareholders accept a €300 mln cash offer made by French mutual insurance group SMABTP.

'The offer is in line with the pro-active growth strategy of the company sought by the management,' the company said on Friday, pointing to SMABTP's pledge to strengthen the company's financial structure to allow STE to resume an investment programme focussed on Paris offices.

STE's board also said the offer will allow the company to grow operations without being forced to sell more assets.

'The board of directors unanimously considers that the offer is in the interests of the company and will enable it to have a stable shareholder structure in order to pursue its development,' it noted. However, it reckoned that the offered price of €48.0 per share does not 'sufficiently reflect the company's intrinsic value'. Even so, the company's directors have committed to tender 51% of their shares.

French mutual insurance group SMABTP announced at end-January that is planned to make a €300 mln cash offer for the French REIT. SMABTP offered €48 a share for STE, which compares to a price of €49.19 on the day prior to the offer.

SMABTP is France’s leading insurance group for the construction and public works sector.

The offer is conditional upon the tender of at least 51% of STE's share capital. SMABTP said, however, that it plans not to exceed the 60% threshold required by French law for STE to maintain its tax-efficient REIT status.

Over the past three years STE has been focussing on selling non-strategic assets to deleverage the business, which resulted in its loan to value dropping from over 60% in 2010 to 47% at year-end 2013.

STE has been at the centre of a number of bids in the recent past. In October last year Patron Capital said it was in exclusive talks to swap an asset for an equity stake in the company. The private equity investor broke off talks later on when STE's shareholder and businessman Chuc Hoang sought to take control of the company. The investor currently owns a 29% stake in the Paris-listed REIT through a number of companies including MI 29, Eurobail and Foncière Wilson.