Primaris Retail Real Estate Investment Trust, a Canadian shopping mall owner that received a takeover bid last week, said the unsolicited offer undervalues the company.
An investor group led by KingSett Capital Inc. offered C$26 per unit of Primaris, 13 percent more than the previous day’s closing share price, Toronto-based KingSett said on Dec. 5. Including debt, the proposed deal values Primaris at C$4.4 billion ($4.5 billion), according to KingSett.
“The board’s preliminary view is that the unsolicited offer is wholly inadequate and undervalues Primaris, including its current pipeline of property development opportunities and acquisitions,” Toronto-based Primaris said today in a statement. “By commencing an offer that runs through the holiday season, KingSett Capital is reducing the amount of time available to the board to consider the offer and for unitholders to make an informed decision.”
Primaris said its board has formed a special committee to evaluate the deal and consider alternatives. The proposed takeover would be the largest ever for a Canadian REIT, according to data compiled by Bloomberg. Primaris owns 33 properties in 26 markets, including the Burlington Mall, Oakville Place and Place d’Orleans in Ontario, the company’s website shows.
The 13 percent premium offered is “small,” given that Primaris’s 52-week high before the deal was announced was C$24.93 in August, the landlord said in the statement. Primaris rose 12 percent this year through Dec. 4, compared with 1.5 percent for the Standard & Poor’s/TSX Composite Index.
Canadian REITs have been involved in 166 announced and completed deals this year valued at about $28 billion, according to data compiled by Bloomberg. The average premium paid or offered in those transactions was 29 percent.
Primaris rose 0.2 percent to C$26.62 at 11:08 a.m. in Toronto trading, indicating that investors except a higher bid.
The company hired Canaccord Genuity Corp. and Evercore Partners to provide it with financial advice.