British Land has tabled a takeover offer for the ailing investment trust Life Science REIT.
The property giant said it had agreed to buy Life Science REIT for approximately £150million, valuing each share at 42.8p.
The cash-and-share deal represents a 21 per cent premium to Life Science’s closing price of 35.4p per share on Tuesday, but a discount of 26 per cent to its net asset value.
The investment trust is currently trading at a near 50 per cent discount to its NAV, according to data from the Association of Investment Companies.
Russ Mould, investment director at stockbroker AJ Bell said the bid suggested ‘the property group is trying its luck or that it believes the assets are valued too highly in the REIT’s accounts.’
British Land is one of the UK’s biggest property developers
The investment trust, which invests in properties that are leased to companies operating in the life sciences sector, launched a strategic review last year.
It attracted some interest but the offers were deemed too low, so in September, Life Science REIT said it would manage a wind-down of the trust.
It said this would be ‘the best means of maximising value for shareholders’ after a ‘challenging’ macro environment meant ‘leasing progress in the period remained slow.’
British Land said the deal would create ‘substantial’ savings on administrative costs and allow it to grow its science and technology footprint.
It agreed to Life Science REIT paying shareholders 14.1p in cash and 0.07 new British Land shares for each share.
Mould said the bid was ‘unexpected’ but ‘certain investors might be glad of a bid as selling property assets can be a slow and painful experience, and at least British Land’s offer means they can move on from what’s been a disappointing investment.’
US activist investor Saba has built a 14.3 per cent stake in the investment trust and will vote for the bid, meaning a total of 31.1 per cent of shares are supportive.
The transaction is expected to be completed in three months, and Land REIT shareholders should be eligible for the final British Land dividend due in May.
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