Key Real Estate Investment Trust units hit a 19-month high Monday after Huntingdon Capital Corp. increased its takeover offer for the retail property trust by $7.4-million and relaxed one of the conditions for the hostile bid.
Key REIT units traded as high as $7.47 after the pre-market announcement, but gave up some of their gains later in the session.
Huntingdon’s new offer is $7.50 per unit, 50 cents higher than before.
Vancouver-based Huntingdon already owns about 5.4 per cent of Key REIT so the new offer would cost it $106-million to buy out all the units it doesn’t already own. The bid values Key REIT at $111.6-million.
The Key REIT board has been urging unitholders to reject Huntingdon’s bid, saying its units were worth between $7.50 and $8 each.
However, the trust’s units hadn’t traded above $7.13 in the past year until the announcement Monday. They haven’t traded above $7.50 since August 2011.
Key REIT, run by chief executive John Bitove, owns a portfolio of more than 200 small-box retail properties across Canada.
On Friday, the Ontario Securities Commission rejected Huntingdon’s request to remove a shareholder rights plan put in place by Key REIT’s board to block the takeover and give it time to explore alternatives.
Huntingdon said Monday it was still willing to offer either all cash or a combination of cash and units. The new combination offer includes $5.625 in cash and about 0.15 of a Huntingdon common share for each Key REIT unit.
Huntingdon also said it was willing to acquire a minimum of 45 per cent of Key REIT’s outstanding shares – down from the previous threshold of 50 per cent.
The new offer will be open until April 1. The previous offer was due to expire Monday.
Huntingdon has 36 office, retail and industrial properties throughout Canada and owns 30 per cent of FAM Real Estate Investment Trust.
Editor's note: This is a corrected story. An earlier version incorrectly stated that ISS Proxy Advisory Services recommended unit holders vote against the Huntingdon offer.