George Armoyan, a major Cominar unitholder, said he was still analyzing the offer and was leaning toward voting against the $2.2-billion takeover deal because the offer is too low.The Globe and Mail
Major Cominar REIT unitholders are lining up against a $2.2-billion takeover offer, saying the deal undervalues the Quebec trust’s real estate portfolio.
Letko, Brosseau & Associates Inc., which said it controls about 3.3 per cent of Cominar’s units, said it will vote against the $11.75-a-unit offer from a team of investors led by Canderel Real Estate Property Inc.
“The proposed transaction is unattractive and falls short of reflecting the full value of Cominar’s real estate portfolio,” Letko said in a press release after markets closed on Wednesday.
Canderel-led investor group to buy Cominar REIT for $2.2-billion
Another major Cominar unitholder, George Armoyan, said he was still analyzing the offer and was leaning toward following Letko’s lead and voting against the deal because the offer is too low. As of early November, Mr. Armoyan held 9.98 per cent of the real estate investment trust’s units through his investment firm G2S2 Capital Inc.
Canderel’s investor group consists of activist funds FrontFour Capital Group LLC and Sandpiper Group, as well as Artis REIT and Koch Real Estate Investments LLC. As part of the deal, private-equity firm Blackstone Group will buy Cominar’s industrial properties, and Montreal real estate company Groupe Mach will purchase some of the REIT’s retail real estate. Their purchase prices have not been disclosed.
The Canderel consortium controls 10.2 per cent of the units and Groupe Mach owns a 5.2-per-cent stake. That is not much more than what Letko and Mr. Armoyan control.
In order for the deal to succeed, it needs the backing of two-thirds of the votes cast by unitholders. A vote is expected to be called for December.
Letko said it is not in Cominar unitholders’ best interest to have the Canderel consortium sell part of its portfolio to Blackstone and Groupe Mach. It also took exception with the lack of disclosure around Blackstone’s purchase price and that one of Cominar’s board members is part of Canderel’s consortium of buyers. Letko did not name the board member in its press release but FrontFour co-founder Zachary George is a Cominar director. Mr. George has declined to talk about the deal.
Letko said it “views this as a conflict, reflecting poor governance practices.”
The offer price of $11.75 represents a 13-per-cent premium to Cominar’s closing price the last trading day before the deal was announced late October. But it is below Cominar’s reported valuation or so-called net asset value of $14.72 a unit as of the end of September and well below the REIT’s trading highs above $20 a unit a decade ago.
Letko said the discount to Cominar’s own valuation makes the trust a rare exception in the REIT world, where most acquisitions come with a premium.
Cominar is trading just below the offer price. Canderel declined to comment on the developments, and Cominar did not immediately respond to a request for comment.
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Rachelle Younglai