The future ownership of Société Foncière Lyonnaise (SFL) is in the balance after four major shareholders put their stakes up for sale.
Up to 55% of the company is on the market after Aviva, Exor Group, Grosvenor and Société Générale formed a consortium, advised by UBS and Société Générale, to discuss the future of their stakes. Main shareholder Aviva, which wants to refocus its investments on the insurance sector, is expected to prefer a cash sale.
Analyst Kempen said the most likely route would be for the 55% stake to be sold to a group of investors, with no one investor expected to take more than 33.3% to avoid triggering a mandatory bid for the whole company. Existing shareholders could benefit from being able to sell their stakes to a wider range of buyers, as international buyers are no longer subject to tax on dividends, which in the past gave French buyers a fiscal advantage.
Kempen added that a sale as part of a takeover bid for the company was possible but candidates for a takeover could be limited because of the combination of SFL’s low yielding portfolio and its discount to net asset value of 12% to 15%.
“The low yield may limit the amount of debt that could be used in a takeover, and this also affects the chances of obtaining a large premium over the share price,” said Kempen’s report. Kempen estimates that €36.40 per share would be a reasonable bid price, assuming transfer costs valued on a discounted basis and including part of the potential book profits of its Paul Cézanne redevelopment.
