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St Modwen leaps on takeover approach

Private equity giant Blackstone has valued the group at £1.2bn
St Modwen leaps on takeover approach
  • Takeover offer represents a 21 per cent premium to the closing share price the day prior to the announcement
  • Underlines the appeal of industrial assets

St Modwen Properties (SMP) has received a £1.2bn takeover offer from private equity giant Blackstone, which further highlights the attractiveness of logistics assets.

The 542p cash offer represents a 21 per cent premium to the real estate group’s closing share price the day prior to the offer’s announcement and is 24 per cent higher than the group’s EPRA net tangible asset value of 438p a share at the end of the 2020 financial year.

The approach follows a series of unsolicited proposals from the Blackstone Funds, but St Modwen said it is at a level that the board would be willing to recommend unanimously should a firm offer be made. 

The shares were up almost a fifth in morning trading, which after a sustained rally since November, leaves them more than 50 per cent higher over the past 12 months. 

As Panmure Gordon notes, one of the major attractions of St Modwen’s portfolio is its industrial development pipeline, which has 7.6m square/feet of space committed and consented for delivery over the next five years. 

Blackstone is currently performing due diligence and there can be no certainty that an offer will be made, it said. 

The offer highlights the potential for further takeover activity within the UK logistics property sector from major institutions looking to gain exposure to what has become one of the few areas of real estate generating consistent growth in rental values. Smaller players such as Warehouse Reit (WHR) and Urban Logistics (SHED) could prove easier pickings.

Last IC view: Buy, 398p, 9 Feb 2021