(Alliance News) - LondonMetric Property PLC and LXi REIT PLC on Monday confirmed that they are in discussions over a potential all-share merger.
The offer would see UK real estate company LondonMetric acquire the entire issued and to-be-issued share capital of LXi, a London-based real estate investment trust.
A firm offer by LondonMetric is contingent on the completion of mutual due diligence, the provision of certain consents, waivers and approvals by each company's lenders, and the recommendation of the merger to LXi's shareholders by its company board.
However, should the merger go ahead, it would create one of Britain's largest real estate investment trusts, with GBP6.4 billion in combined assets and a market capitalisation of approximately GBP3.9 billion.
As well as providing "improved share liquidity and better access to capital," LXi believes the merger would benefit from the two companies' "complementary strategic approaches" and the "economies of scale" that would come as a result.
"A combined portfolio aligned to structurally supported sectors" was also touted as a benefit, with "approximately 93% exposure to the logistics, healthcare, convenience, entertainment and leisure sectors."
However, the group said: "There can be no certainty that any firm offer will be made nor as to the terms on which any firm offer might be made."
LondonMetric has until January 15 to announce either a firm intention to make an offer for LXi, or to announce that it does not wish to make an offer.
In London on Monday afternoon, LXi REIT shares closed up 4.9% at 104.40 pence each.
LondonMetric shares were down 1.2% at 195.00p each.
By Hugh Cameron, Alliance News reporter
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LondonMetric (LMP)