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Two of Australia’s biggest Bunnings landlords are set to merge forces after BWT Trust (ASX: BWT) announced plans to acquire Newmark Property REIT (ASX: NPR) in a deal that values the combined entity at close to $2.5 billion.
Under the planned scrip-based merger, BWP Management, the responsible entity for BWP Trust, is offering 0.4 units for each Newmark security in the off-market takeover bid.
The offer is an improvement on an unsolicited offer received by Newmark from BWP last month of 0.3675 BWP units per security – an indicative offer that BWP says was ‘confidential, conditional and non-binding’.
BWP Management says the latest offer has an implied value of $1.39 per Newmark security, based on a price of $3.74 per BWP unit. This is a 43.1 per cent premium to Newmark’s last closing price of 97c on 23 January prior to today’s announcement.
Newmark unitholders will also retain the latest December-quarter distribution of 1.9c per security.
The news pushed Newmark shares almost 40 per cent higher to a peak of $1.35 by the midday session on the ASX, while BWP Trust units were 5c lower at $3.42.
The target’s independent board committee has unanimously recommended that Newmark securityholders accept the BWP takeover offer in the absence of a superior proposal.
The merger will create an investment group that manages 84 properties worth $3.5 billion.
BWP has 75 properties in its portfolio, which is dominated by Bunnings as tenants.
Newmark adds another nine large-format retail assets, most of them leased to Wesfarmers (ASX: WES) brands Bunnings, Officeworks and Kmart, which takes the merged portfolio to 84 ‘geographically diversified properties’.
The addition of the Newmark properties to the portfolio will also lift BWP’s weighted average lease expiry profile from 3.6 years to 3.9 years.
BWP Management says the merger is in the best interests of both BWP unitholders and Newmark securityholders, providing an opportunity to combine their ‘complementary portfolios of quality assets and similar tenant profiles’.
BWP Management’s managing director Mark Scatena says the acquisition is in line with the group’s focus on ‘growing the portfolio through assets with strong location attributes and tenant covenants’.
“The merger proposal demonstrates the trust’s ability to leverage its capital structure and disciplined focus on portfolio growth, consistent with our objective of providing unitholders with a secure and growing income stream and long-term capital growth”, says Scatena.
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