December 10, 2024 | Real Estate | Asia | Active
On 4-Dec-24, a consortium led by real estate private equity firm Starwood Capital Group announced an agreement to acquire Hong Kong-listed and Cayman Islands-incorporated ESR Group (“ESR”) for HKD 55.2bn ($7.1bn) via a scheme of arrangement under section 86 of the Cayman Islands’ Companies Act. ESR shareholders can elect (i) a cash offer of HKD 13.00 per share, (ii) one share in EquityCo per ESR share, or (iii) a mix of cash and shares. EquityCo is an unlisted holding company created on 3-Sep-24 for this transaction that is currently entirely held by the consortium members. Along with Starwood are Sixth Street and SSW Partners, with participation from the Qatar Investment Authority (“QIA”), Warburg Pincus, and ESR’s founders; each member with the exception of Sixth Street, to varying degrees, already owns a stake in ESR and, collectively, the consortium holds 39.91% of the target. The cash consideration implies a 30.0% premium over ESR’s closing price of HKD 10.00 per share on 10-May-24, before ESR publicly disclosed it received a non-binding proposal from the consortium, without disclosing terms. It also presents a 13.6% one-day premium (to 28-Nov-24, when ESR shares were suspended), and a 199.1% premium over ESR’s net tangible asset value per share (HKD 4.35) as on 30-Jun-24. The offer is cum-dividend, meaning that the consortium reserves the right to reduce the consideration for any dividend or return of capital. ESR has, nonetheless, confirmed that it has no plans to announce any dividend before the effective date. ESR has established an Independent Board Committee (IBC) of independent non-executive directors to evaluate the deal and an Independent Financial Adviser (IFA) will be appointed with the IBC’s approval. The consortium has also entered into exclusivity and standstill arrangements with ESR, to dissuade competing offers during this period. The deal is subject to the satisfaction of pre-conditions and conditions. Among the pre-conditions are clearances from ...
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