Gazit Globe Ltd. (TASE: GZT) (the “
Company” or
“
Gazit”), a leading global real estate company
focused on the ownership, management and development of retail and
mixed use properties in major urban markets, announced today that
it has entered into a definitive agreement to acquire all of the
issued shares it does not currently own of its publicly-traded
Jersey Island subsidiary, Atrium European Real Estate Limited
(“
Atrium”), at a price of 3.75 Euros per share and
which equates to gross consideration of 565 million Euros
(approximately NIS 2.2 billion), to be paid solely in cash. The
shares subject of the offer comprise approximately 150 million
shares or 40% of Atrium’s outstanding share capital. Upon the
closing of the acquisition, Atrium will be a private company and
its shares will be de-listed from trading on the Vienna Stock
Exchange and the Euronext Amsterdam. In parallel, Gazit has entered
into an agreement pursuant to which, upon closing, the Company will
sell to Menora Mivtachim up to approximately 12% of Atrium’s
outstanding shares at an identical price to the price at which the
Company is acquiring those shares, for total consideration of
approximately 150 million Euros (approximately NIS 600 million)
after adjustments to the purchase price.
Before the transaction is complete, Atrium
intends to distribute to all of its shareholders (including Gazit)
a special dividend of 0.60 Euros per share, after which the offer
price for the transaction will be adjusted to 3.15 Euros per share,
which equates to gross consideration of approximately 475 million
Euros (approximately NIS 1.9 billion). The transaction is expected
to close in January 2020. Atrium is not expected to distribute any
additional dividends until the completion of the transaction.
The acquisition of Atrium’s shares will be
carried out by Gazit via a scheme of arrangement to be approved by
the Royal Courts of Jersey, and with the approval of Atrium’s
minority shareholders and their shareholders of record, based on
the unanimous recommendation of an independent committee of
Atrium’s board of directors that is supported by, among other
things, a fairness opinions of UBS investment bank and Lazard that
have advised the independent committee of Atrium.
Under the acquisition agreement, Atrium will
have 7 weeks, from the date of this announcement, to solicit other
bids (a “go shop”) for the acquisition of all of Atrium’s share
capital. To the extent that a bona fide superior offer (based on
price and terms) to Gazit’s offer is made for Atrium, the Atrium
board may retract its recommendation of the offer being made by
Gazit in favor of such superior offer, and would seek Gazit’s
approval for such offer.
Gazit has indicated that it plans to cooperate
with Atrium in seeking superior offers, and, to the extent any such
offer is received, Gazit has informed Atrium that it will consider
such offer in good faith to sell its Atrium shares (although Gazit
reserves the right, at its sole discretion, to determine whether to
sell its Atrium shares).
The implementation agreement entered into in
connection with the offer allows the Atrium board to retract its
recommendation in favor of the transaction with Gazit under certain
circumstances, subject to the payment to Gazit of a break-up fee of
10 million Euros (approximately NIS 40 million). Gazit may withdraw
its offer in case of a material adverse change. In this case, Gazit
will pay a reverse break-up fee of 10 million Euros (approximately
NIS 40 million).
Gazit’s prospective increase of its holdings in
Atrium and the de-listing of Atrium’s shares from trading are
significant steps in the implementation of Gazit’s strategy to
increase the direct ownership component of its real estate assets
while focusing on dominant properties in major cities. Upon
completion of the acquisition, Gazit’s privately-held assets will
increase by 2.7 billion Euros (approximately NIS 10.6 billion) and
will constitute approximately 77% of the value of its assets
(expanded solo).
The prospective transaction presents many
advantages to Gazit, including:
- Increased ownership in attractive pricing in a high-quality
portfolio of assets with which the Company is very familiar, of
which approximately 85% of the asset value is concentrated in two
European countries undergoing healthy growth—Poland and the Czech
Republic—and in which approximately 50% of the assets are
concentrated in Warsaw and Prague, two major European cities.
- Approximately 15% expected increase in Company’s FFO by NIS 85
million (NIS 0.46 per share) to NIS 670 million (NIS 3.60 per
share).
- the majority of Atrium’s assets of approximately 2.2 billion
Euros are unencumbered.
- Growth in Gazit’s shareholders’ equity of NIS 304 million (NIS
1.65 per share) as a result of acquiring Atrium’s shares at a price
below Atrium’s corresponding shareholders’ equity value.
- Acquisition of a platform with proven management expertise,
creating the potential for expansion to other European countries
and other types of real estate assets.
Chaim Katzman, Gazit’s founder and CEO,
commented: “Atrium possesses a high-quality portfolio,
most of which is located in the capital cities of Poland and the
Czech Republic—Warsaw and Prague—together with a high-quality,
experienced management team. Gazit acquired a material stake
in Atrium 11 years ago and is thus very familiar with the company,
its assets and their future potential. Direct ownership over assets
such as those held by Atrium furthers our strategy to directly own
irreplaceable assets in densely populated urban areas with future
growth potential and mixed uses.”
“After we completed earlier this year the sale
of most of our holdings in First Capital, we are investing a
portion of our liquidity in increasing our holdings in
high-quality, international investment grade assets, which is
expected to increase our FFO and our cash flow by 15% and by
approximately NIS 85 million per year. If the transaction is
completed, our portfolio of unencumbered properties will increase
from NIS 6 billion to NIS 15 billion, which will increase our
Group’s financial flexibility and reduce our financial expenses. We
are very happy to have Menora Mivtachim as a partner for this
investment in Atrium and are confident that it will be for the
benefit of all interested parties in Gazit and Menora
Mivtachim.”
Nir Moroz, Chief Investment Officer of
Menora-Mivtachim added: “As part of our approach to
diversify our portfolio, we partnered with Gazit Globe, a market
leader with an extensive experience. Atrium owns a high-quality
portfolio of assets which is concentrated in the growing Poland and
Czech Republic, while 50% of the assets are concentrated in the
major cities Warsaw and Prague. The Investment is part of Menora's
strategy to seek investment opportunities for our clients in order
to maximize the return of our portfolio.”
Gazit Globe acquired a controlling interest
in Atrium in 2008. Since that time, the Company has focused on
improved geographic exposure via a proactive approach and has sold
more than 120 non-core properties in secondary markets, including
exiting the Hungary, Latvia and Romania markets. As of today,
Atrium owns 33 income producing assets with a total value of
approximately 3 billion Euros of which over 85% are located in
Poland and the Czech Republic, and 50% of which are located in the
main cities of Warsaw and Prague, which are undergoing rapid growth
during the recent years.
Financing
As of today, Gazit's liquidity which includes
case, cash equivalent and available credit facilities (expanded
solo) is approximately NIS 4.4 billion.Upon completion of the
transaction, the ratio of Gazit’s net debt to its total assets
(expanded solo) is expected to be approximately 48.2% (compared to
46.5% at the date of the announcement), and the ratio of Gazit’s
net debt to its total assets (consolidated) is expected to be
approximately 56.2% (compared to 53.2% at the date of the
announcement).
After closing of the acquisition and receipt of
the special dividend that is expected to be paid by Atrium prior to
closing, Gazit’s liquidity is expected to remain high, and its
remaining cash, cash equivalents and available credit facilities
are expected to total NIS 3.8 billion (of which NIS 1 billion in
cash).
In addition, the Company is expected to have NIS
6.3 billion of unencumbered assets, of which NIS 2 billion are
located in Israel. In addition, Atrium also has 2.2 billion Euros
of unencumbered assets (approximately NIS 8.8 billion), and
revolving credit facilities in the amount of Euro 300 million, of
which 257 million Euros unutilized as of March 31, 2019.
The Company intends to maintain its leverage
below 50% (expanded solo).
Citigroup acted as Gazit's financial advisor and
Kirkland & Ellis International LLP acted as Gazit’s legal
advisor in the transaction.
Additional Financial DataBelow
please find summary pro forma data for the consolidated Company
assuming completion of the acquisition and based on adjusted
financial statements as of March 31, 2019:
|
As of March 31, 2019 (as adjusted)* |
Pro Forma (Post-Acquisition) |
FFO Guidance (NIS million) |
577-592 |
662-677 |
FFO Per Share Guidance (NIS) |
3.10-3.18 |
3.56-3.64 |
Net Debt to Total Asset (Consolidated) |
53.2% |
56.2% |
Net Debt to Total Asset (Expanded Solo) |
46.5% |
48.2% |
Shareholders' Equity (NIS million) |
8,540 |
8,844 |
Shareholders' Equity Per Share (NIS) |
45.6 |
47.3 |
*The financial results reported by the Company
as of March 31, 2019 have been adjusted to account for the
transaction involving FCR which closed on April 17, 2019, the
acquisition of Marketplace in Boston on April, 2019 and the
disposals and acquisitions of assets in Atrium in July, 2019.
About Gazit Globe
Gazit Globe is a leading global real estate
company focused on the ownership, management and development of
retail and mixed-use properties in North America, Israel, Brazil,
northern, central and Eastern Europe, located in urban growth
markets. Gazit Globe is listed on the Tel Aviv Stock Exchange
(TASE: GZT) and is included in the TA-35 index in Israel. As of
March 31, 2019, Gazit Globe owns and operates 103 properties, with
a gross leasable area of approximately 2.5 million square meters
and a total value of approximately NIS 40 billion. In addition, as
of May 22, 2019 the Company owns approximately 9.9% of First
Capital Realty Inc.
FOR ADDITIONAL INFORMATION
A comprehensive copy of the Company’s financial
report is available on Gazit Globe website at
www.gazitglobe.com
Investors Contact: IR@gazitgroup.com, Media
Contact: PR@gazitgroup.com
Gazit Globe Headquarters, Tel-Aviv, Israel, Tel:
+972 3 6948000
Forward Looking Statements
This press release may contain forward-looking
statements within the meaning of applicable securities laws. Such
statements involve a number of known and unknown risks and
uncertainties, many of which are outside our control that could
cause our future results, performance or achievements to differ
significantly from the results, performance or achievements
expressed or implied by such forward-looking statements. Important
factors that could cause or contribute to such differences include
risks detailed in our public filings with the Israeli Securities
Authority and Tel Aviv Stock Exchange. Except as required by
applicable law, we undertake no obligation to update any
forward-looking or other statements herein, whether as a result of
new information, future events or otherwise.
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