Unibail, Rodamco create Europe's largest property company

France's largest real estate investment trust Unibail and Rotterdam-based retail property company Rodamco Europe have agreed to merge their activities in a conglomerate valued at EUR 21.7 bn. The new entity will be the largest property company in Europe by market capitalisation and the second largest retail property company in the world after Australia's Westfield Group.

The two companies announced during a joint press conference in the Sheraton Hotel at Amsterdam's Schiphol Airport on 10 April that Unibail has offered 0.530 shares for every Rodamco Europe stock. This values the Dutch shopping-mall owner at EUR 124.8 per share, a 15% premium on Rodamco's last traded shares. Unibail is a commercial property investment company mainly active in the office, shopping malls and convention centre sectors in France. Rodamco is active in over 14 countries and specialises on retail. 'This transaction will mean the merger of two worlds,' Rodamco Europe's ceo Maarten Hulshoff stressed.

The new merged group will be the retail market leader in France, The Netherlands, Spain and Sweden and will feature 95 shopping centres across 14 European countries. 'We will target a maximum exposure of 50% to any single country over time,' Unibail's ceo Guillaume Poitrinal explained. 'This means Unibail will have to consistently decrease its exposure to the French market to just less than 50%,' he said. The Frenchman will head the new group that will be registered in Paris, but with international headquarters operations based in the Netherlands. 'I will move to Amsterdam with my family and kids,' he said. On the other hand, Rodamco's ceo Maarten Hulshoff is stepping down from his post. 'I believe there should be only one captain on a ship,' he commented. The merged group will have a new name, which will be made public in the next few weeks.

The two companies said Rodamco will own 49.7% of the new group, with Unibail controlling 50.3%. It is intended the merged company will retain listings on Euronext in both Paris and in Amsterdam. Unibail's and Rodamco's SIIC and FBI regimes, the French and Dutch equivalent of the real estate investment trusts, will be preserved. The two companies said synergies related to the existing portfolio alone are expected to generate an increase in net rental income by EUR 40 mln to EUR 65 mln per annum by 2012.

The transaction - expected to be finalised by June - is supported by Dutch pension fund PGGM, which holds a 25% stake in Rodamco. Morgan Stanley, ABN Amro Holdings and Perella Weinberg Partners advised Unibail. Goldman Sachs Group and UBS acted for Rodamco.