By Clara-Laeila Laudette and Nathan Allen
MADRID -Spain’s Inmobiliaria Colonial on Thursday said it would submit a voluntary takeover offer to buy up to 100% of French subsidiary Societe Fonciere Lyonnaise (SFL) for 806 million euros ($977 million).
With the deal, which is set to close by August, Colonial aims to increase its exposure to prime Paris real estate at a discount to market prices, while simplifying its corporate structure, the company said.
In the first stage of the two-step deal, Colonial will buy the 13% stake in SFL held by Credit Agricole’s Predica subsidiary for 592 million euros.
It will then launch a voluntary mixed tender offer for the remaining 5% equity not held by Predica or Colonial, which is valued at 214 million euros.
“This is a way to buy what everybody wants to buy but nobody is able to – high-quality, scarce assets,” Colonial Chief Executive Pere Vinolas said on a conference call.
“On top of that we do it with a blend of cash and securities at a price below market value,” he added.
Vinolas said Colonial would present the offer to France’s AMF market regulator on Friday, but stressed that the deal had “the blessing of all necessary entities”.
He said the company saw the total absorption of SFL as a medium-term goal.
The Spanish real estate firm, which specialises in office space, currently has an 82% stake in SFL.
After closing, the real estate investment trust’s (REIT) exposure in Paris will increase in value by just over 1 billion euros and account for more than 60% of the group’s total portfolio.
Colonial said it would compensate all willing minority shareholders of SFL with 46.66 euros and five new Colonial shares for every SFL share they buy.
Corporate Managing Director Carmina Ganyet said the assumption was that all minority shareholders would accept the terms.
The deal should boost earnings per share in the short term and increase the firm’s net asset value in the longer term, she said.
($1 = 0.8249 euros)