Blackstone ups offer for St Modwen bowing to shareholder pressure

PUBLISHED BY
Anna Domanska



TAGS:



1 month ago




In a rare move, Blackstone has increased its offer for St Modwen Properties from the original bid of £1.24bn, or 542p per share, to £1.27bn, or 560p a share.

The company board approved the deal earlier, but some shareholders, namely J O Hambro and Janus Henderson, were unhappy with the price fixed, which they felt was too low.

St Modwen has attracted the attention of fund managers and private equity firms both amidst an acquisition wave that has hit UK firms.

Blackstone Acquisition of Ancestry

Blackstone Manhattan Office

The original offer for St Modwen drew fire from the major shareholders who argued that the company was worth more. Blackstone needs the approval of more than 75 per cent of voting shareholders for its offer to be accepted. With J O Hambro holding about 9.3 per cent of St Modwen’s shares across its funds and advised accounts, such an approval is difficult. Aviva Investors, which holds more than 7 per cent, and Aberdeen Standard Investments, a top 20 investor, also said they would back the higher offer.

In May, when the offer was made, J O Hambro had said it was against the sale of St Modwen at the price quoted. “We feel it would be a shame for stock market investors to lose the long-term optionality within the group’s businesses and land bank, built up over many years, particularly for the small premium being offered today.”

Alex Savvides, senior fund manager of the JOHCM UK dynamic fund, said the increased offer was a “vindication of our firm opinion that the board had sold all shareholders short. The offer . . . is a begrudging acceptance by Blackstone that it is underpaying for this asset,” he added. “That we got any increase at all is a win for shareholder stewardship, engagement and activism.”

St Modwen is a FTSE 250 company and is into logistics development and management, housebuilding, and has enough real estate to develop 19million sq ft of warehouse space in the next few years. Blackstone, through its Mileway platform, has a European warehouse portfolio worth billions.

Danuta Gray, chairperson of St Modwen, said the board had “considered Blackstone’s approach from a position of strength” and took “a robust position on value”. James Seppala, head of Blackstone’s European real estate division, said the private equity group would “be providing significant additional capital” to St Modwen.

St Modwen is among the 13 listed companies that have attracted the attention of private equity firms this year. But traditional fund managers argue that the offers made are too low.

Legal & General Investment Management, the UK’s largest asset manager, have objected to the Clayton, Dubilier & Rice’s bid for Wm Morrisons, the supermarket chain, while M&G Investments and Allianz Global Investors last month criticised plans to sell FTSE 250-listed UDG Healthcare to CD&R.

Delivery and storage networks have been in high demand, and bidding for sites has been competitive as investors increased their exposure to a sector seen as a relatively safe source of long-term income.

Through its subsidiary Mileway, Blackstone has been aggressively acquiring warehouses across Europe in the past two years. James Seppala, head of Blackstone real estate in Europe, has described logistics as “one of our highest conviction, long-term investment themes”.

St Modwen’s extensive logistics development funnel was the deciding factor in Blackstone’s decision to acquire the company, said Miranda Cockburn, an analyst at Panmure Gordon. “Any company with the ability to develop into the strength of demand [for warehousing] will do well in the next few years,” she said. “Pulling together a land bank is not easy and land values for industrial land have gone up massively in the past few years.”

Blackstone is capital flush from the $14 billion Saudi-backed infrastructure funds and using the same to target UK investments. The group’s global head of infrastructure, Sean Klimczak, told the Financial Times last year that it was “quite bullish” on the UK, which it saw as “undervalued” and a “significant opportunity”.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Strong iPhone 12 sales could boost Apple’s Q3 2021 earnings

Strong iPhone 12 sales could boost Apple’s Q3 2021 earnings

Will Apple manage to post solid earnings in Q3 2021? Here’s what Wall Street’s top analysts have to say ahead of Apple’s Q3 2021 earnings report today.
2 hours ago
Tesla earnings top $1 billion for the first time

Tesla earnings top $1 billion for the first time

Tesla earnings not only blew past analyst expectations but also marked the first time the automaker’s quarterly profit joined the three-comma club.
4 hours ago
Elon Musk tweet pushes Dogecoin prices up again

Elon Musk tweet pushes Dogecoin prices up again

Dogecoin was launched as a joke in 2013. The cryptocurrency is up a staggering 6,000% compared to last year’s prices due to wild speculations.
4 hours ago
Amazon to hire a crypto lead, may soon accept payments in cryptocurrency

Amazon to hire a crypto lead, may soon accept payments in cryptocurrency

The product lead will develop the full marketing strategy from customer experience to technical development to launching it.
1 day ago
Billionaire CEO Elon Musk Shares the Brutal Truth about Life as an Entrepreneur

Billionaire CEO Elon Musk Shares the Brutal Truth about Life as an Entrepreneur

“I would say I’ve had some pretty tough life experiences and Tesla’s probably responsible for two-thirds of all personal and professional pain combined, to give you a sense o
3 days ago
AT&T, Airbnb & UPS among firms to face Akamai’s global outage

AT&T, Airbnb & UPS among firms to face Akamai’s global outage

Global outage causes Akamai Technologies to re-think cyber securities.
4 days ago