11 January 2024
If you are covering the merger of LondonMetric Property (LMP.L) with LXI REIT, please see comments below from Oli Creasey, property analyst at Quilter Cheviot:
“LondonMetric and LXi this morning confirmed a merger, releasing the agreed terms of such a transaction. The transaction will be an all-share deal with LXi shareholders receiving 0.55 LMP share per LXi share held.
“The transaction will create one of the largest publicly-traded property companies in the UK, with a net asset value and market cap likely to rank the combined entity in the top four REITs in the country. Notably, the company’s market cap will be marginally larger than British Land’s, Andrew Jones’s (LondonMetric CEO) former employer where he was formerly head of retail. The combined company may also be large enough to push for inclusion in large cap indices, although the combined market cap is not large enough to guarantee such a change.
“The combination will see LondonMetric buyout LXi’s external management team, and the expectation is that LMP’s existing management team will continue to run the larger group. Nick Leslau will join the board, currently a director of LXi.
“There is likely to be a reasonable amount of synergy in the transaction given the long leases on both property portfolios, but particularly LXi’s, meaning the requirement for active asset management is somewhat limited. The size of the property team is unlikely to need to double, even if the portfolio does.
“The key to the transaction is likely to be the shareholder votes, which will both need to pass in order for the deal to finalise. The only material issue we foresee is that the LXi share price (103p) is trading marginally above the implied offer value (101.2p). LXi shareholders may take some convincing to accept the offer on this basis, and given a 75% approval rate is required, the hurdle is relatively high.”
