South African based Growthpoint Properties (JSE: GRT) are looking to acquire Capital and Regional (LON: CAL) in a reported £150 million deal.
Capital and Regional own eight shopping centers, in locations such as Walthamstow, Woodford Green. Talks first commenced last month about the potential move.
The first part of the investment is for Growthpoint to acquire 219.8 million existing shares in Capital & Regional
Today, Growthpoint have offered Capital and Regional Investors 33p per share, at a stake of 30.3%.
If accepted, this would be a 100% premium to the company’s share price before the deal was announced.
Growthpoint have also pledged for new shares to raise £77.9 million, giving it a 51.2% stakehold in Capital and Regional.
Capital and Regional look to formalize this deal in an attempt to cut their mass debt, currently at £400 million.
Plans were announced to invest into their shopping centers to give less exposure to fashion stores, and introduce more ‘need’ stores such as chemists, grocers and opticians.
Growthpoint Chair Francois Marais said “Growthpoint views its investment in Capital & Regional as an exciting next step in the execution of its internationalisation strategy. Growthpoint’s strategic intent is to support the growth of Capital & Regional in the same way it has done following its investments in GOZ and GW. The result of Growthpoint’s investment in GOZ and GW was a significant improvement in profitability, growth in their property portfolios, both in size and quality, and a value uplift for shareholders,”
Currently shares of Capital and Regional plc are trading at 26.18p per share, a notable 23.22% increase. 17/11/2019 15:22BST.
As the pound continues to fluctuate and falling real estate values overseas investors are finding UK firms attractive hence the move.
If this proposed takeover were to happen, this would give the South African firm a foothold in the UK market.
However, uncertainty with Brexit negotiations may play a factor in Growthpoints ultimate decision.