SINGAPORE (THE BUSINESS TIMES) – The managers of ESR-Reit and ARA Logos Logistics Trust have proposed a $1.4 billion merger, where ESR-Reit will acquire all of ARA Logos’ units in exchange for a combination of cash and new units.
The proposed merger, which will result in the merged entity being named ESR-Logos Reit, will be effected by way of a trust scheme of arrangement. ARA Logos unitholders will receive a scheme consideration of $0.95 per ARA Logos unit – comprising $0.095 in cash and 1.6765 new ESR-Reit units, to be issued at $0.51 apiece.
For illustrative purposes, this means an ARA Logos unit holder will receive $95 in cash and 1,676 units for every 1,000 ARA Logos units held by the books closure date, to be announced.
Based on pro forma estimates, the proposed deal will be accretive on both ESR-Reit and ARA Logos’ financial year 2020 distribution per unit (DPU). ESR-Reit’s DPU will rise 5.8 per cent to 2.935 cents from 2.775 cents, while ARA Logos’ DPU will increase by 8.2 per cent to 5.512 cents from 5.094 cents.
If the proposed merger is completed, ESR-Logos Reit will contain $5.4 billion in total assets across 87 portfolio properties (including 20 in Australia) and 41 fund properties in Australia.
ESR-Reit owns 58 properties that includes business parks, logistics and warehouses, with an aggregate property value of $3.2 billion. ARA Logos has 29 logistics warehouses in Singapore and Australia valued at around $1.8 billion.
Mr Adrian Chui, the chief executive of ESR-Reit’s manager, will become the CEO of ESR-Logos Reit’s manager, while Ms Karen Lee – CEO of ARA Logos’ manager – will become deputy CEO.
Trading halts for both ARA Logos and ESR-Reit’s units were called on Friday (Oct 15) morning before the market opened. On Thursday, ARA Logos units closed 1.6 per cent, or $0.015 higher, at $0.935, while ESR-Reit closed flat at $0.465.