Just a month ago, it seemed like Cominar REIT and Canmarc REIT couldn’t get along. Now they’ve come together with a friendly takeover, fully supported by Canmarc’s board.
To get the target onside, Cominar had to up its bid from $15.30 per unit to $16.50 in cash per Canmarc unit, or 0.7607 trust units of Cominar. That’s an 8 per cent increase, and pushes the deal size to $904-million. However, keep in mind that REITs have also been hot, so the entire sector has appreciated since Cominar’s first bid in late November. (Full disclosure, I own Cominar.)
Historically, things haven’t been pretty between these two firms. In 2007 they got into a battle over the acquisition of Alexis Nihon REIT. After Cominar signed an agreement with Alexis Nihon to merge the two companies, Canmarc (part of Homburg Invest at the time) came in and soured the deal, ultimately winning control of Alexis Nihon.
When all was said and done, Homburg agreed to sell Cominar the target’s industrial and office properties.
More recently, just last month Canmarc installed a new shareholder rights plan to give it time to either find a different bid, or figure out its defence. Though it could have easily done this with any hostile bidder, things certainly weren’t ‘friendly’ between the two management teams late last year.
With Canmarc under its belt, Cominar will boost its asset base by almost 50 per cent to over 30 million square feet, solidifying its stronghold in Quebec. Cominar will also become the second largest diversified Canadian REIT.
TD Securities and Canaccord Genuity Corp advised Canmarc’s special committie, as did Osler, Hoskin & Harcourt LLP and Fasken Martineau DuMoulin LLP.
BMO Nesbitt Burns served as Cominar's financial advisor and Davies Ward Phillips & Vineberg LLP provided legal advice.