LondonMetric agrees acquisition of Highcroft Investments

(Sharecast News) - LondonMetric Property has agreed to acquire Highcroft Investments in a recommended all-share deal, it announced on Thursday, that values the UK real estate investment trust at £43.8m. The FTSE 100 company said the acquisition, to be effected by a court-sanctioned scheme of arrangement, offered Highcroft shareholders 4.65 new LondonMetric shares for each Highcroft share held.

It said the terms implied a value of 842.1p per Highcroft share, representing a 40.4% premium to Highcroft's closing price of 600p on 26 March.

Highcroft shareholders would also be entitled to retain an interim dividend of 35p per share, payable on 16 May.

Highcroft owns a portfolio focused on logistics and retail warehousing, which together accounted for nearly 80% of its holdings.

LondonMetric highlighted the strategic fit of Highcroft's assets, and said the combination would give Highcroft shareholders access to a larger, more liquid vehicle with stronger income characteristics, a 99% occupied portfolio, and a sector-leading weighted average unexpired lease term of 19 years.

The firm said it expected the deal to be earnings accretive and noted that based on its forecast 2026 dividend of 12.4p per share, Highcroft shareholders would receive a pro forma dividend of about 58p per share, broadly in line with Highcroft's current full-year payout.

Highcroft's board had unanimously recommended the offer, and directors holding 3.3% of shares had committed to vote in favour.

LondonMetric said it had also secured undertakings from other shareholders representing 56.9%, bringing total support to 60.2% of Highcroft's issued share capital.

Subject to shareholder and court approval, the transaction was expected to complete by 21 May.

If approved, Highcroft shareholders would also be eligible for LondonMetric's fourth-quarter dividend, expected to be announced in late May and paid in July.

"This transaction adds complementary assets in our favoured sectors on an attractive basis across all key property metrics," said chief executive officer Andrew Jones.

"It supports our strategy of greater consolidation within the sector.

"We are confident of our ability to extract economies of scale to deliver both value and earnings accretion. We will immediately begin to integrate the Highcroft portfolio and work towards disposing of approximately 20 per cent. of assets that are deemed non-core."

Reporting by Josh White for Sharecast.com.