Aroundtown SA (IRSH)
Aroundtown and TLG signed binding business combination agreement paving the
way to become one of the leading pan-European commercial real estate company
19-Nov-2019 / 01:18 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
*THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY
OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, SOUTH
AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION
OF APPLICABLE LAWS OR REGULATIONS*
*AROUNDTOWN AND TLG SIGNED BINDING BUSINESS COMBINATION AGREEMENT*
*PAVING THE WAY TO BECOME ONE OF THE LEADING PAN-EUROPEAN COMMERCIAL REAL
ESTATE COMPANY*
*- *After announcing non-binding terms, Aroundtown and TLG have now agreed
on the final terms
- Aroundtown will make a voluntary tender offer in Aroundtown shares for all
outstanding shares in TLG
- TLG shareholders will receive 3.6 new Aroundtown shares for each TLG share
(based on June 30, 2019 EPRA NAVs per share of both companies)
- The combined business creates a market leader in offices and hotels, with
combined asset base in excess of EUR25 billion
- Expected operational and financial synergies to result in annual pre-tax
FFO savings of EUR 110 million to EUR 139 million over time
- Updated governance following successful merger, with TLG representatives
further strengthening the existing Aroundtown management team
- Significant overlap in top tier cities such as Berlin, Frankfurt, Dresden,
Leipzig and Hamburg, positioning the combined company as a leading landlord
- Management expertise and scale to accelerate and develop-to-core in prime
locations and realize full potential of nearly EUR2 billion combined
development potential
- TLG's major shareholder irrevocably supports the transaction
_18 November 2019._
Following Aroundtown SA's ('*Aroundtown*') announcement on 1 September 2019
on the evaluation of a potential merger with TLG Immobilien AG ('*TLG*'),
and subsequent announcement on 27 October 2019 on agreeing non-binding key
terms for a potential merger, both companies have successfully agreed on
terms to achieve a combination of their businesses from an economic,
financial and operational standpoint.
On the basis of resolutions by its Board of Directors today, Aroundtown will
be making a voluntary public tender offer to acquire the outstanding shares
of TLG in considerations for shares of Aroundtown. TLG shareholders will
receive 3.6 new Aroundtown shares for each TLG share, based on EPRA NAVs as
of 30 June 2019 of both companies. Based on the closing price of the
Aroundtown shares prior to the day of the announcement of the offer, the
resulting offer price amounts to EUR27.655 per TLG share. TLG's boards will
support the offer and, subject to review of the offer document, recommend
their shareholders to accept the offer.
In order to implement the planned combination in an efficient and value
creative manner, both companies have signed a Business Combination Agreement
which addresses the common understanding in regards to strategy and
structure of the combined Group.
The exchange offer is strongly supported by TLG's major shareholders
representing, subject to certain conditions, approx. 28% of TLG's total
share capital, supporting the transaction, with an irrevocable committement
to tender. The voluntary public tender offer is not expected to be
conditional on a minimum acceptance ratio.
*Creation of a market leader in European commercial real estate*
In the event of a successful transaction, Aroundtown and TLG will
consolidate over EUR25 billion in combined assets and will rank as one of
the the top 3 real estate companies among listed European real estate with a
focus on offices and hotels predominantly in Germany and the Netherlands,
and, through its strategic holding in Grand City Properties SA, in
residential.
The combined strategy will be built on existing similar value-add business
models. Aroundtown's active asset management approach and experience in
managing large scale value-add potential will be complemented perfectly by
TLG's high quality stable asset base, with embedded redevelopment potentials
in top tier locations. A strategy formed around critical mass in overlapping
locations and asset classes, management's joint expertise in accelerating
like-for-like rental growth and stronger negotiating power towards tenants
and market participants will form the fundamentals of the operational
strategy.
*Highly synergetic combination, accretive to both shareholder groups *
Both companies have on the basis of mutual due diligence identified
operational, financing and development synergies with a positive expected
effect on combined FFO. Including the identified synergy potential, the
transaction will be accretive from year 1 to all shareholders.
Both companies estimate an increase in FFO of the combined company in the
range of EUR110-EUR139 million per annum (pre-tax) within five years post
merger, which will be realized through operational cost synergies, financial
savings by accelerating Aroundtown's goal of a rating upgrade and financial
synergies on TLG level through benefitting from a higher rating.
Operational synergies in the expected amount of EUR24-EUR34 million per
annum (pre-tax) mainly due to efficiency gains through joint operations and
headquarters, strong portfolio overlap, efficient cost optimization on
corporate cost level, ancillary cost reduction, scale benefits, IT systems
etc.
In addition, the merger is credit rating enhancing which is expected to be a
significant factor in accelerating refinancing benefits for Aroundtown's
existing debt and perpetual notes, resulting in an acceleration related
financial savings of EUR64-80 million per annum (pre-tax).
The synergies from financial savings on TLG's existing debt and perpetual
notes in the amount of EUR22-25 million per annum (pre-tax) as TLG will
benefit from the potential credit rating upgrade to A- of the combined
entity.
*Unlocking embedded potential of development pipeline*
Both companies' strong development pipeline is focused on top tier cities
with significant embedded value of building rights and rent increase
potential. The strong overlap supports planning, negotiation and execution
processes and the enlarged combined development team with the substantial
balance sheet scale will enable to accelerate the execution and completion
of the development portfolio and thus result in earlier cash flow
generation. The merger would enable to accelerate the organic
develop-to-core prime assets while still keeping the development below 15%
of the combined balance sheet. The combined companies stronger pre-letting
capability can enable accelerated development without the risk of a
speculative construction. The development potentials strongly complement
each other and will enhance the quality of the existing portfolio with a
high quality growth engine.
*Attractive total return proposition and enhanced liquidity*
In addition to identified synergies, the combination will further reduce the
risk profile for investors, improving the combined cost of equity. Strong
value creation from active asset management, development as well as
accretive acquisition pipeline will enhance the total shareholder return
prospects.
Furthermore, with enhanced free float, liquidity and visibility, the merger
supports potential DAX inclusion, which both companies expect will attract
new pockets of large-cap capital and could trigger further positive
re-rating of the share price.
*Business Combination Agreement, forming the foundation for improved
governance*
The Business Combination Agreement sets out Aroundtown's and TLG's common
understanding as to, among other things, the strategy and structure of the
combined company, the offer process, synergies potential, the future
composition of the governance bodies of Aroundtown and TLG and the
integration process.
Upon Aroundtown holding more than 50% of all shares in TLG ('Holding
Threshold'), it is contemplated that Aroundtown will introduce a governance
structure consisting of a management body (comité de direction) and a Board
of Directors. Aroundtown's management body will consist of five members, and
its board of directors of seven to eight, three to four of which will be
independent. The CEO and additional two to four management body members are
to be nominated by Aroundtown subject to the Holding Threshold. TLG is
entitled to nominate the CFO subject to the Holding Threshold and an
additional member of the management body upon reaching a holding of 66% of
all TLG shares. One of the members nominated by TLG would carry the title of
Co-CEO. Upon Aroundtown holding more than 40% of all shares in TLG, the
Chairman of Aroundtown's board of directors would be nominated by TLG.
Aroundtown's current senior management and executive members of the Board of
Directors have confirmed their long term commitment to continue leading the
combined company as members of the respective governing bodies after
completion of the transaction.
The Advisory Board of Aroundtown will stay unmodified, with the continuous
leadership of the chairman Dr Gerhard Cromme and the vice chairmen Mr Gabay.
The combined company will keep its seat in Luxembourg and is contemplated to
do business under a new name to be defined jointly by Aroundtown and TLG.
The German operational headquarters will continue to be in Berlin, Germany.
Shmuel Mayo, CEO of Aroundtown said: 'After jointly announcing non-binding
terms, we are pleased to be able to announce concrete plans to combine
Aroundtown and TLG into a leading European commercial real estate player.
This transaction will be accretive to both shareholder groups from year 1,
in terms of FFO and NAV per share, portfolio quality and strategic
positioning.'
Gerhard Cromme, Chairman of Aroundtown's Advisory Board commented: 'As
previously stated, the strategic, operational and financial merits of
merging the two companies are crystal clear to all of us. We have concluded
our conversations and we are fully committed to continue working towards the
consolidation of the leading European commercial property company in terms
of scale, portfolio attributes, returns, risk, management and governance.'
The exchange offer will be implemented subject to certain closing conditions
for a transaction of this type and size. These conditions will be presented
in the offer document and include, among others, the implementation of a
capital increase in kind in order to create new shares for the exchange
offer.
The business combination is intended to be concluded in Q1 2020.
Further details about the tender offer will be part of the offer document to
be submitted to the German Federal Financial Supervisory Authority (BaFin).
Aroundtown anticipates that the offer document will be published in a few
weeks.
The offer is subject to approval of the offer document by BaFin, to the
offer terms set out in the offer, and to approval by relevant anti-trust
authorities. Following approval, the offer document will be made available
on our website under link [1].
JP Morgan, Deutsche Bank, Kempen and Victoria Partners are acting as
financial advisers and Taylor Wessing and GSK Stockman are acting as legal
advisers to Aroundtown.
*About the Company*
Aroundtown SA (symbol: AT1), trading on the Prime Standard of the Frankfurt
Stock Exchange, is the largest listed and highest rated (BBB+ by S&P) German
commercial real estate company. Aroundtown invests in income generating
quality properties with value-add potential in central locations in top tier
European cities mainly in Germany/NL.
Aroundtown SA (ISIN: LU1673108939) is a public limited liability company
(société anonyme) established under the laws of the Grand Duchy of
Luxembourg, registered with the Luxembourg Trade and Companies Register
(Registre de Commerce et des Sociétés, Luxembourg) under number B217868,
having its registered office at 1, Avenue du Bois, L-1251 Luxembourg, Grand
Duchy of Luxembourg.
*Contact *
Timothy Wright
T: +352 285 7741
E: info@Aroundtown.de
www.Aroundtown.de [2]
*DISCLAIMER *
THIS ANNOUNCEMENT DOES NEITHER CONSTITUTE AN OFFER TO EXCHANGE OR PURCHASE
NOR THE SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE ANY SECURITIES.
MOREOVER, THIS ANNOUNCEMENT DOES NEITHER CONSTITUTE AN OFFER TO BUY NOR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN AROUNDTOWN SA. AROUNDTOWN
SA HAS NOT YET MADE A DECISION ON ITS INTENTION TO MAKE ANY PUBLIC TAKEOVER
OFFER AND ANY TERMS OF SUCH INTENTION TO LAUNCH A PUBLIC TAKEOVER OFFER WILL
BE SUBJECT TO AN OFFER DOCUMENT TO BE APPROVED BY GERMAN FEDERAL FINANCIAL
SUPERVISORY AUTHORITY (BUNDESANSTALT FÜR
FINANZDIENSTLEISTUNGSAUFSICHT). THE COMPANY MAY NOT MAKE A DECISION TO
INITIATE A PUBLIC TAKEOVER OFFER AT ALL.
THE SECURITIES MENTIONED IN THIS ANNOUNCEMENT HAVE NOT BEEN, AND WILL NOT
BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR
IN IN ANY OTHER JURISDICTION, WHERE TO DO SO WOULD BE A VIOLATION OF
APPLICABLE LAW. THERE WILL BE NO PUBLIC OFFERING OF SECURITIES OF AROUNDTOWN
SA IN THE UNITED STATES.
THIS ANNOUNCEMENT MAY CONTAIN PROJECTIONS OR ESTIMATES RELATING TO PLANS AND
OBJECTIVES RELATING TO OUR FUTURE OPERATIONS, PRODUCTS, OR SERVICES, FUTURE
FINANCIAL RESULTS, OR ASSUMPTIONS UNDERLYING OR RELATING TO ANY SUCH
STATEMENTS, EACH OF WHICH CONSTITUTES A FORWARD-LOOKING STATEMENT SUBJECT TO
RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF AROUNDTOWN
SA. ACTUAL RESULTS COULD DIFFER MATERIALLY, DEPENDING ON A NUMBER OF
FACTORS. IT IS POSSIBLE THAT AROUNDTOWN SA WILL CHANGE ITS ASSUMPTIONS
REFLECTED IN THIS ANNOUNCEMENTS.
ISIN: LU1673108939, XS1227093611, XS1336607715, XS1403685636,
XS1449707055, XS1532877757, XS1540071724, XS1586386739,
XS1649193403, XS1700429308, XS1715306012, XS1761721262,
XS1815135352, XS1753814141, CH0398677689, XS1857310814
Category Code: MSCU
TIDM: IRSH
LEI Code: 529900H4DWG3KWMBMQ39
Sequence No.: 29949
EQS News ID: 915735
End of Announcement EQS News Service
1: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=e5792e9460d5861ac5344249baddefda&application_id=915735&site_id=vwd&application_name=news
2: https://link.cockpit.eqs.com/cgi-bin/fncls.ssp?fn=redirect&url=297cc9a7a72fca4905b7f9b22c5861be&application_id=915735&site_id=vwd&application_name=news
(END) Dow Jones Newswires
November 18, 2019 19:18 ET (00:18 GMT)
