Blackstone and St Modwen have agreed a £1.2bn take private deal.
The private equity firm made the takeover bid at 542p a share earlier this month. The price represents a 21.1% premium to the closing price on 6 May and a 23.8% premium to St Modwen’s EPRA NTA per share of 438p at the end of 2020.
St Modwen directors have said they intend to vote in favour of the acquisition by the newly formed business, Brighton Bidco, at the general meeting. They own 1.37% of the company. The Clarke family, which owns a further 5.22% in St Modwen, has also confirmed it will support the acquisition, bringing the total to 6.59% in favour.
The proposed acquisition follows multiple proposals from Blackstone in the 10 weeks following St Modwen’s most recent results. In February, the company reported a £120.8m full-year loss and NAV down by 11.6% in the period to the end of November.
St Modwen said the acquisition would accelerate the value that could be realised in the company. It highlighted the potential in the logistics business, where around 12m sq ft, 60% of its landbank, does not currently have planning consent. This “will require significant additional capital” and could see St Modwen almost double delivery from 1.2m sq ft in 2020 to 2m in 2022.
Looking at the housebuilding business, it aims to improve the margin and ROCE, but said it recognised the “extended period of time” it may take to deliver improvements, and the “inherent cyclicity in the housebuilding business”.
St Modwen has seen its strategic land and regeneration business shrink from £1.2bn in 2017 to £332m in 2020, through disposals and residential land and retail write-downs. It aims to sell up to £200m in further assets by 2023.
Blackstone said St Modwen Logistics would complement the Mileway portfolio and would be further enhanced by becoming a part of that platform. In order to maximise St Modwen Homes, the private partnership will support capital investment opportunities to deliver incremental growth.
The acquisition is expected to complete in July 2021.
St Modwen is advised by Lazard, JP Morgan Cazenove and Numis. Blackstone is advised by Rothschild & Co.
To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews
