British Land Company PLC (LSE:BLND) has agreed a £150 million cash and share offer for Life Science REIT PLC (AIM:LABS).
Under the terms of the offer, Life Science REIT shareholders will receive 14.1p in cash and 0.07 new British Land shares for each share they own.
Based on British Land’s closing price of 410p on Tuesday, this implies a total value of 42.8p per LABS share, representing a 21% premium to the previous closing price and a 15% premium to the three-month average.
British Land said the acquisition is "immediately earnings accretive from synergies alone", is neutral on a net tangible asset basis, and has "scope for further significant earnings growth" from the lease-up of new space.
Following completion, LABS shareholders will hold approximately 2.4% of the enlarged group.
Back in September, the investor in life science properties, mainly in the 'Golden Triangle' of London, Oxford and Cambridge, started an orderly wind-down of its portfolio after a six-month strategic review and formal sale process.
British Land said the acquisition complements its focus on innovation campuses and is consistent with its strategy of targeting property in fast-growing science and technology sectors, with the LABS portfolio comprising five Gold Triangle assets with an 8% net reversionary yield.
The LABS board has unanimously recommended the offer, noting that while the offer represents a discount to the EPRA net tangible assets of 57.7p per share, it offers a premium to recent share prices in the context of a challenging macroeconomic environment and limited sector liquidity.
Chair Claire Boyle said the LABS board beleives the deal "will provide a superior outcome" to a managed wind-down, "delivering greater and more immediate value, as well as the option to remain invested in the sector longer term under the umbrella of a larger and more diversified company whilst removing the uncertainty, market risk, illiquidity and frictional costs associated with a managed wind-down of the portfolio".
British Land has already received undertakings and support letters representing over 31% of LABS shares.
British Land CEO Simon Carter described the deal as "an exciting opportunity...to drive value".
"Our scalable platform will unlock significant synergies and attract a broader range of occupiers from the fast-growing Science & Technology sector than the previous life science mandate has allowed."