"This is a unique opportunity to acquire an irreplaceable and much sought-after enclosed shopping centre portfolio. It permits us to expand into a new and exciting asset class in Canada with an existing infrastructure having an experienced and dedicated professional team," said Tom Hofstedter, CEO of H&R. "This acquisition will solidify H&R's position as Canada's leading diversified real estate investment trust and is complementary to our existing low risk, high quality and conservative philosophy."
"We are excited to be able to participate in the U.S. retail expansion into Canada, with Target set to open in 10 Primaris shopping centres within the next few months. This will undoubtedly lead to increased traffic and sales within the Primaris portfolio and ultimately result in an increase in value to our combined unitholders," Mr. Hofstedter added.
"This transaction is compelling from a number of perspectives," said John Morrison, CEO of Primaris. "It enhances H&R's objective of providing unitholders with stable and growing cash distributions from a diversified portfolio. It also provides H&R with the unique opportunity to own a significant portfolio of high quality regional shopping centres and management platform."
"We have succeeded in our mandate to attract a financially superior alternative to the hostile offer currently in the market," said Bill Biggar, Chair of the Independent Committee at Primaris. "This transaction delivers greater value to our unitholders while allowing them to remain invested in the enclosed shopping centre asset class, and provides our employees with the opportunity to be a part of the largest consolidated REIT in Canada, with excellent growth prospects."
Under the terms of the Agreement, H&R will acquire all of the issued and outstanding units of Primaris for a combination of cash and H&R stapled units. For each Primaris unit held, Primaris unitholders may elect to receive either $28.00 in cash, subject to a maximum amount of $700 million, or 1.13 stapled units of H&R, substantially all of which would be received on a tax-deferred basis. If the maximum cash is elected, it will represent approximately 25 per cent of the total consideration. In the event that Primaris unitholders elect more cash than is available, the cash consideration will be prorated among those unitholders electing cash, with the balance of the consideration being settled in H&R stapled units on the basis of the 1.13 exchange ratio. Based on H&R's 20-day VWAP ended January 15, 2013 of $23.99, the value of each Primaris unit under the transaction at full proration will be $27.33, consisting of $6.89 in cash, and 0.8518 H&R units (valued at $20.44). The transaction has been structured so holders of Primaris units will receive their H&R stapled units on a substantially tax-deferred rollover (the receipt of H&R Finance Trust units, expected to be less than 4% of the total unit consideration, will be taxable).
The cash price of $28.00 for each Primaris unit represents a 22.0 per cent premium over the $22.95 volume weighted average price of Primaris units for the 20 trading days up to and including December 4, 2012, the day before KingSett Capital announced its hostile bid for Primaris. The full proration price of $27.33 represents a 19.1 per cent premium over the same reference price. If the maximum cash is elected, Primaris unitholders will own approximately 30 per cent of the combined REIT.
Most Popular Stories
- SEO Traffic Lab Celebrate Wins at Digital Marketing Event 'Internet World 2013' in London
- Social Media Initiatives Should Follow Customers' Lead
- Apple CEO: Offshore Units Not a 'Tax Gimmick'
- U.S. Senate Accuses Apple of Large-scale Tax Avoidance
- UTEP Water Recycling Project Wins Venture Titles
- Marketo Makes a Mint in IPO: Stock Shoots Up More than 50 Percent
- Bieber Booed at Billboard Awards
- Crude Oil Up, Gasoline Down
- Austin Startup Compare Metrics Raises $3.5 Million for Expansion
- Why So Many Top 'Car Guys' Are Actually Women