Monmouth Agrees to $4 Billion Takeover After Rejecting Zell

(Bloomberg) -- Industrial Logistics Properties Trust agreed to acquire Monmouth Real Estate Investment Corp. for about $4 billion after Monmouth in August rejected a $2.8 billion offer from Sam Zell. 

ILPT will pay $21 a share, according to a statement Friday. The transaction, which includes debt and other costs, gives Monmouth an equity value of $2.06 billion, according to Bloomberg calculations, and is priced about 11% higher than Thursday’s close. 

Investors have been bidding up the value of warehouses as the pandemic accelerates consumers’ shift online. Monmouth drew interest from groups including Zell’s Equity Commonwealth, whose offer was rejected by shareholders in August.  

ILPT expects to find a partner on the deal that’s willing to invest as much as $1.3 billion, according to the statement. The balance will be financed with new mortgage debt and the assumption of about $409 million of existing Monmouth loans. It could also sell some assets to finance the transaction.

Monmouth owns 126 industrial properties and the deal is expected to be immediately accretive, according to the statement. The transaction is expected be completed in the first half of next year, subject to a shareholder vote. 

Monmouth also said Friday that it reached a cooperative agreement with Blackwells Capital, which owns about 4.3% of the company’s outstanding common stock. Among other things, Blackwells withdrew its slate of proposed nominees and various shareholder proposals and has committed to vote its shares in favor of all the board’s nominees and in support of its proposals. 

The announcements follow a months-long battle for control of the industrial REIT.

Monmouth initially agreed in May to be acquired by Equity Commonwealth, in an all-stock deal. That bid was sweetened after Starwood Capital Group made a competing proposal for $18.80 a share in cash. Starwood later raised its offer but it was rejected by Monmouth’s board.

Blackwells Capital, which had previously proposed acquiring Monmouth for $18 a share, came out against the deal with Equity Commonwealth, as did International Shareholder Services. Blackwells Capital, which had previously sought seats on the Monmouth board, said that the all-stock deal with Zell undervalued the real estate investment trust.   

Monmouth was founded by the Landy family, which runs the company. 

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