Aventus (ASX:AVN) share price shoots 9% higher on HomeCo merger plans

M&A activity is heating up…

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The Aventus Group (ASX: AVN) share price is shooting higher on Monday morning.

At the time of writing, the large format retail centre operator’s shares are up 9% to a record high of $3.62.

Why is the Aventus share price shooting higher?

Investors have been bidding the Aventus share price higher today after it announced plans to merge with Home Consortium Ltd (ASX: HMC) and HomeCo Daily Needs REIT (ASX: HDN).

According to the release, the agreement will see Aventus shareholders receive 2.2 HomeCo Daily Needs shares and either $0.285 cash or 0.038 Home Consortium shares for every Aventus share they own. This implies an offer price of $3.82, which represents a 15.3% premium to the Aventus share price at the end of last week.

The release notes that the merger will lead to a significant increase in scale, with a combined portfolio size of ~$4.1 billion and a market capitalisation of ~$3.2 billion. This is expected to qualify the merged group for eligibility for inclusion in the S&P/ASX 200 Index (ASX: XJO).

It also expected to allow the merged group to capitalise on its combined 2.5 million square metre landbank across the strongest metropolitan markets of Sydney, Melbourne, Brisbane, Perth and Adelaide to deliver future last mile logistics infrastructure.

What now?

The Aventus Board unanimously considers the merger to be in the best interests of shareholders and recommends that they vote in favour of it. This is in the absence of a superior proposal and subject to the independent expert’s report.

Aventus’ Chairman, Bruce Carter, commented: “The Merger is attractive for Aventus securityholders, both because of the potential offered by being part of the larger merged groups and because the offer reflects a material premium to Aventus’ trading price and its NTA.”

This sentiment was echoed by HomeCo Daily Needs’ Chairman, Simon Shakesheff.

He said: “We believe the merger is strategically and financially attractive for both HDN and AVN and consistent with HDN’s objective to deliver stable and growing distributions. The increased scale and enhanced capability will allow the merged group to unlock significant value that would not have been accessible on a standalone basis.”

The Aventus share price is now up 30% in 2021.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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