Shaftesbury PLC (LSE:SHB) and Capital & Counties (LSE:CAPC) Properties PLC have agreed terms on a recommended all-share merger to create a group with a £5bn property portfolio in London’s West End.
Shares in Shaftesbury fell 7.6% to 538p after the deal was confirmed, while Capco’s were little moved at 151.8p.
The merger will be effected via a scheme of arrangement of Shaftesbury, where its shareholders will be entitled to receive 3.356 new Capco shares for each share they own.
Shaftesbury shareholders will end up owning 53% of the enlarged group, with Capco the remaining 47%, as indicated just over a month ago when terms were first proposed.
Capco, valued at close to £1.3bn, already owns a 25.2% stake in the larger Shaftesbury, which was valued at over £2bn at the last closing price.
In a joint statement, the pair said the deal has the irrevocable support of major shareholder Norges Bank, which has a 25% stake in Shaftesbury and a 15% holding in Capco, while Madison International Realty, a 4.3% shareholder of Capco, has said it will vote in favour of the merger.
There is therefore 35.3% and 19.2% support for the deal respectively for Shaftesbury and Capco, taking these shareholdings together with irrevocable undertakings provided by directors.
As rationale for the deal the companies said a merger provided “a rare opportunity in the listed real estate sector to invest in an exceptional mixed-use portfolio in the heart of central London” split 35%/34%/17%/14% between retail, hospitality, offices and residential across Covent Garden, Carnaby Street, Chinatown and Soho.
The combined portfolio has an estimated rental value of roughly £218mln, EPRA net tangible assets of £3.8bn or 207p per share as of end-March.