Shares in National Storage REIT (ASX: NSR) are trading higher on Monday after the company's board said it would back a private equity-led takeover for the company.
National Storage, in late November, was forced to reveal that it was in takeover talks with Brookfield Property Group and GIC Investments after an article alluding to the deal was published by The Australian.
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Bid now recommended by board
At the time, the then potential bid was "non-binding, indicative and conditional"; however, the NSR board on Monday said it would back the bid in the absence of a superior offer.
As the company said in a statement to the ASX:
The board of NSR unanimously recommends that NSR securityholders vote in favour of the transaction, in the absence of a superior proposal and subject to the independent expert concluding in the independent expert's report (and continuing to conclude) that the transaction is in the best interests of NSR securityholders. Subject to the same qualifications, each NSR director intends to vote all NSR stapled securities controlled or held by them in favour of the transaction resolutions.
National Storage chair Anthony Keane said the board believed the transaction provided an attractive valuation and certainty for shareholders.
As he said:
The offer from the consortium follows a number of earlier offers and a period of negotiation. The decision to recommend this offer follows extensive work by the NSR board and its advisers to assess the fundamental value of NSR and its medium-to-long term prospects. Accordingly, the NSR board is unanimous in its recommendation that the transaction represents a compelling outcome for NSR securityholders.
Shareholders in NSR will receive $2.86 per share, which will be reduced by 6 cents per share if the company pays out a dividend of that amount before the deal goes through.
Regulatory sign-off needed
The deal is subject to approval by the Foreign Investment Review Board and the New Zealand Office of Overseas Investment.
It will also need to be voted on by National Storage shareholders, with the meeting at which this vote is to take place likely to be held in April.
The deal is also subject to a break fee of $40 million should the consortium or National Storage decide to pull out of the transaction.
An independent expert's report on the deal will now be completed and provided to shareholders before they are due to vote on the transaction.
National Storage shares were changing hands for $2.80 on Monday morning.
