Kennedy Wilson has agreed a $4bn (£3.1bn) merger between Kennedy Wilson Europe Real Estate and Kennedy Wilson Holdings to create a new global real estate investment and asset management platform.
Kennedy Wilson Holdings is a US-listed company also managed by Kennedy Wilson. The company said the increased scale of the combined group would receive greater weighting in US stock indices, enhancing liquidity in the stock and broadening the potential investor base.
The companies will have a combined market capitalisation of $4bn and a global portfolio of more than 400 properties.
It is hoped the enhanced scale of the combined group will result in enhanced access to capital and an expanded set of acquisition and development opportunities. There will be no change to management or systems as a result of the merger, Kennedy Wilson said. Kennedy Wilson Europe is led by president and chief executive Mary Ricks.
The Kennedy Wilson board and independent committee of Kennedy Wilson Europe have agreed a recommended all-share combination transaction of the two companies.
It is intended that the merger will be effected by means of a court-sanctioned scheme of arrangement of Kennedy Wilson Europe under article 125 of the Jersey Companies Law. The scheme is expected to become effective in the third quarter of 2017. Rothschild and J.P. Morgan Cazenove are financial advisors on the merger. Sullivan & Cromwell and Appleby are the appointed legal advisors.
Under the terms of the merger, each KWE scheme shareholder will be entitled to receive 0.667 new KW shares for each KWE scheme share.
The terms of the merger value each KWE share at approximately 1,174p and KWE’s entire issued share capital at approximately £1.5bn.
Following completion of the merger, KWE shareholders would own approximately 36% and existing KW shareholders would own approximately 64% of the combined group.
KWE shareholders will be entitled to receive the next quarterly dividend of 12p per KWE share, which KWE intends to pay to KWE shareholders on the register of members on 13 May 2017.
William J. McMorrow, chairman and chief executive officer of KW said: “This transaction represents one of the most significant milestones in our 40-year history.
“The combination will create a leading global real estate investment and asset management platform with enhanced diversification supported by the continuity of leadership with a strong, proven track record.
“The enterprise will benefit from greater scale and improved liquidity, which will enhance our ability to generate attractive risk-adjusted returns for our shareholders.
“The merger significantly improves our recurring cash flow profile, and, as such, we are pleased to announce our intention to increase our first quarterly dividend by approximately 12% upon completing the transaction, which demonstrates our confidence in the combination and our long-term prospects.”
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