Novion Property Group (ASX: NVN) shares surged 10% on Tuesday after the company announced a takeover offer from Federation Centres Ltd (ASX: FDC). The offer, which is actually a share exchange merger, will create Australia's third largest real estate investment trust worth in excess of $11 billion.
While that's the background, here are the details for shareholders:
- Federation Centres is the suitor in the deal, meaning Novion shares will be exchanged for Federation Shares. Each Novion share will be exchanged for 0.8225 Federation shares.
- Novion's shareholders will end up owning around 64% of the combined company but current chief executive Steven Sewell will lead the combined group with Novion director Peter Hay taking the role of chairman.
- The combined company, which is yet to be named, will have over $22 billion of retail assets under management across 102 retail assets with over $18.2 billion in annual retail sales.
- The company will likely be included in the ASX 30, potentially increasing demand for the shares from fund managers.
- The merger is expected to save at least $42 million per annum of net operational cost savings and provides Federation Centres with the development expertise it requires to develop company-owned sites.
- The dividend yield of the combined group should increase compared to the individual companies, however it's difficult to assess how the yield will be affected by the merger.
