Colonial launches 100% of its French subsidiary Société Foncière Lyonnaise (SFL) in a transaction that amounts to 800 million euros and with which it will increase its exposure in the Paris office market by 1,000 million.
The company has already reached an agreement with Predica, the personal insurance subsidiary of Crédit Agricole Assurances, to acquire the 12.9% that it has in SFL and thus achieve 94% and will subsequently launch a mixed voluntary takeover bid in cash and shares on the rest of SFL shareholders “with the aim of increasing participation and providing liquidity to shareholders who consider it”, as explained by Pere Viñolas, CEO of the equity firm.
The objective of this movement, which has been among the Socimi’s plans for years, is to strengthen its presence in what is “the largest office market in the eurozone”, according to Juan José Brugera, president of Colonial, and that in this way it would have a weight in the company’s assets of 60%.
The company carries out this operation with “a 13% discount on the appraised value of the assets,” says Viñolas, who highlights that this transaction represents a simplification of the Socimi’s shareholding structure.
In this way, it specifies that Predica “will cease to be a shareholder of SFL and will become a shareholder of Colonial with an approximate presence of 4% and at the same time increase its strategic alliance with SFL through joint participation in different assets.” Viñolas also points out that this operation will entail a “little relevant variation for Colonial’s main shareholders,” among which the Qatari sovereign fund stands out with 20%.
How is the operation structured?
To carry out the purchase of Predica’s stake and the takeover bid, the operation will be completed with an asset swap worth 300 million euros, a capital increase of 350 million euros and a cash outlay of another 150 million. euros, bringing the total operation to 800 million euros.
Specifically, Colonial will acquire, on the one hand, the 5% that Predica maintains in SFL. On the other hand, Predica will transfer 8% of its stake in Colonial’s subsidiary to SFL, within the framework of a share buy-back program.
In the case of the mixed voluntary takeover bid, to be held this month, Colonial will offer the minority shareholders of the French subsidiary a consideration consisting of 46.66 euros and five newly issued Colonial shares for each SFL share, which “It has a market value of about 89 euros and means buying with a relevant premium” of 43% compared to SFL’s price, “which will be at 62 euros,” according to Viñolas.
Colonial will not use the forced sale procedure after the completion of the OPA and SFL’s shares will continue to be listed on Euronext Paris, at least in the short term.
This was explained by Viñolas, who pointed out that for the moment the operation “will not mean the disappearance of the subsidiary or its exclusion from the French listing”, although it has acknowledged that “in the medium term, full integration is part of our objectives ” and also highlighted that the operation will increase the company’s” free float “by approximately 400 million euros in terms of net asset value.
60% of assets in Paris
With this action, the group seeks to simplify its shareholding in the French subsidiary and improve its exposure in the Parisian market, where it will now hold 60% of its assets.
As Viñolas clarified at a press conference, after this capital increase in Paris, the company will have assets worth 12,000 million euros, of which 60% will reside in the French capital , 25% in Madrid and another 12 % in Barcelona.
“What we do with this operation is to opt for Paris in an investment movement of SFL in the ‘prime’ of Paris”, explained the president of Colonial, Juan José Brugera.
Likewise, Bruguera stressed that the transaction in the largest office market in the Eurozone will reaffirm the group’s commitment to quality assets, offering “the best return for our shareholders and strengthening our platform to continue growing in Europe.”
After the operation, Colonial has ensured that the long-term relationship between SFL and Predica will continue with the creation of new joint ventures, 51% owned by SFL and 49% by Predica in certain assets such as 103 Grenelle, Cloud , Cézanne St. Honoré and 92 Champs Élysées.
For its part, SFL will fully own the assets of 90 Champs Élysées, 104 Hausmann, Galerie Champs Élysées and Washington Plaza, acquiring Predica’s stakes in the companies holding these assets.
It is planned that the transfer of 5% of Predica in SFL to Colonial and the exchange of shares and assets between SFL and Predica will be done simultaneously. The company has clarified that all these transactions are subject to the usual conditions (including the waiver of the council’s right of first refusal and the authorization of the AMF on the takeover bid) that must be fulfilled before December 31, 2021.
The group chaired by Brugera has called an extraordinary general meeting of shareholders to approve the contribution of shares by Predica and the capital increase as a result of the public mixed acquisition offer, which will take place on June 28.
