Alternative Income REIT’s (LON:AIRE) biggest shareholder Glenstone has sweetened its bid for the company from 70p to 71.4p per share in cash. Glenstone described its new offer for the commercial property-focused REIT as ‘final’.
And yet the Guernsey-listed REIT reserved the right to upsize its offer should a counterbid emerge. This looks to be a response to another potential AIRE suitor, AEW UK REIT (LON:AEWU), which is monitoring the situation.
AEWU previously had an all-share approach pitched 3% below AIRE’s then net asset value (NAV) rejected by the board.
Low-ball bid?
Glenstone’s 1.4p, or 2%, increase from the previous 70p or £56.3 million cash offer Glenstone made on 12 June is the equivalent of the fourth quarter dividend AIRE shareholders would receive at the end of August.
A long-standing shareholder in AIRE Glenstone’s latest offer is 15.4% below AIRE’s NAV of 84p per share at 31 March. As such, is an improvement on the 17% discount of its first offer. Glenstone wants to pursue a managed wind-down of the portfolio. It also plans to de-list AIRE from the London Stock Exchange.
Expressions of support
Glenstone has set a deadline of 20 July for AIRE shareholders to accept. It holds a 24% stake and has commitments and expressions of support from holders of a further 7.97%.
These include Adam Smith, a Glenstone director who also sits on AIRE’s board, and Hawksmoor Investment Management in relation to its 4.52 million of shares.
The improved offer price from Glenstone does at least represent a modest premium to AIRE’s prevailing market price. Whether it will win the support of AIRE’s independent board remains to be seen.
The uplift doesn’t do much for AIRE shareholders beyond giving them the dividend they would have been entitled to in a few weeks anyway.
‘The new offer price still represents a 15% discount to the 31 March NAV,’ noted Winterfllood’s Emma Bird. She sees ‘no reason why the board’s other concerns will have alleviated since it rejected the previous offer.
‘Nevertheless, with Glenstone owning or having received indications of support from an aggregate of circa 33% of the share capital, the 50% acceptance condition may be met even without the recommendation of the board, as we suspect that some shareholders may wish to take advantage of the opportunity to exit this small and reasonably illiquid vehicle.’
Read the press release here: https://www.londonstockexchange.com/news-article/market-news/increased-offer-and-offer-document-publication/17672900
