(Alliance News) - LondonMetric Property PLC and LXi REIT PLC on Thursday said they have agreed to an all-share merger that will create the UK's fourth largest real estate investment trust.
The merger will see LondonMetric takeover LXi REIT, whose shareholders will receive 0.55 of a new LondonMetric share for each LXi REIT share that they own.
Late last month, the pair had confirmed they were in talks to merge. At the undisturbed price of 197.4 pence per LondonMetric share on December 15, the last trading day before the announcement, the deal values LXi REIT's equity at GBP1.9 billion.
LondonMetric shares were up 0.6% at 185.25p early Thursday in London for a market capitalisation of GBP2.02 billion. LXi REIT shares were down 0.1% at 102.92p, giving a GBP1.76 billion market cap.
LondonMetric shareholders will own 54% of the enlarged company and LXi holders the remaining 46%.
The merger will create a combined company with EPRA net tangible assets of GBP4.1 billion, which the pair said will make it the fourth largest UK REIT.
LondonMetric has received acceptances for the offer from shareholders representing 13.1% of LXi shares.
The combination is expected to be completed by the end of March.
Shareholders still will receive the dividends declared by each company for the financial third quarter that ended December 31. Holders of the combined company also will receive a fourth quarter dividend with respect to the previous LXi shares equivalent to LXi's previous three quarterly dividends, while LondonMetric is targeting a 7.4% increase in its financial 2024 dividend to 10.2 pence per share.
"This is a compelling transaction which creates the UK's leading triple net lease REIT and underscores our ambitions to leverage our management platform and access exciting new opportunities across the UK real estate market," LondonMetric Chief Executive Andrew Jones said.
"The deal gives us access to a very well let triple net portfolio of key operating assets and brings together two highly complementary investment approaches that embrace the qualities of income compounding."
The LondonMetric and LXi combination is the second all-share merger in the London-listed property sector this week, after Belvoir Group PLC and Property Franchise Group PLC on Wednesday said they have agreed an all-share merger that will create a GBP214 million company managing 152,000 properties across the UK.
By Tom Waite, Alliance News editor
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