Urban Logistics REIT has decided to walk away from merger discussions with abrdn Property Income Trust (API).
This comes after two proposals from Urban Logistics REIT: an initial one on 20 February 2024 to compete with a bid from Custodian Property Income REIT (CREI), and a follow-up proposal on 18 March to acquire API's logistics and retail warehouses.
After Urban Logistics REIT withdrew its bid, API shareholders are now left with the following options: accepting the existing offer from CREI or winding down operations.
Urban Logistics said that, due to Takeover Panel rules, it cannot pursue API for the next six months unless specific conditions are met. These include Custodian's offer being withdrawn with API's board approval, a new third-party offer for API emerges, API proposes a specific type of waiver or restructuring, or a significant change in circumstances occurs, as determined by the Takeover Panel.
Meanwhile, the board of directors at API continues to firmly recommend that shareholders vote in favor of the all-share merger with CREI as they believe this merger offers the best possible outcome for API shareholders.
API shareholders are set to vote on 25 March, while CREI shareholders have overwhelmingly approved the merger.
The API Board believes the CREI merger offers significant advantages over a wind-down, including a premium share price, higher dividends (7.3%), stronger growth potential, and increased company size and liquidity.
James Clifton-Brown, chair of API, said: ‘The API Board believes that the CREI merger represents the best outcome for API shareholders and unanimously recommends that API shareholders vote in favour of the CREI merger. If the CREI merger is not approved by the requisite majority of API Shareholders, the API Board has made clear that a managed wind-down is the next best alternative, but API shareholders should not expect the same sale values as for ordinary course disposals.’
API and CREI struck a deal in January to combine forces through an all-share merger that would create a REIT with a combined asset value of £1 bn (€1.2 bn).
Under the terms of the agreement, API shareholders will receive 0.78 shares in the new, merged company for each share they currently hold.
