Monmouth Holders Reject Bid from Zell’s Equity Commonwealth
(Bloomberg) -- Sam Zell’s offer to buy Monmouth Real Estate Investment Corp. for $2.8 billion, including debt, was rejected at a special meeting of shareholders Tuesday.
Monmouth said in a statement that the preliminary figures show Zell’s Equity Commonwealth fell short of the necessary support to proceed with the transaction, confirming an earlier report by Bloomberg News. Zell’s firm had been competing in a months-long battle to acquire the industrial real estate company with Starwood Capital Group.
Michael Landy, Monmouth’s chief executive officer, said the company remains open to all options that will create long-term value for shareholders, and believed it was well-positioned for growth and success.
“While we recognize that stockholders have a wide range of views and differing time-horizons and tax considerations, we are disappointed in the outcome of today’s vote,” he said. “We continue to believe in the merits of a transaction that offers Monmouth stockholders the opportunity to continue to participate in the growth of the industrial real estate sector.”
Equity Commonwealth said in a separate statement it was disappointed with the vote. It said it had terminated the merger agreement, and would seek reimbursement of fees and expenses associated with it.
Shares in Monmouth rose 0.3% to $18.89 at 1:23 p.m. in New York Tuesday, giving the company a market value of about $1.9 billion. Equity Commonwealth rose 1.3% to $26.42.
New Jersey-based Monmouth agreed to be acquired by Equity Commonwealth in May in an all-stock deal. That kicked off a bidding war between Equity Commonwealth and Starwood. Equity Commonwealth’s latest offer amounted to $19 per share in cash, or 0.713 of an Equity Commonwealth share, for each Monmouth share.
Starwood most recently offered $19.20 a share in cash, or roughly $2.9 billion, including debt. Monmouth’s board rejected that offer, however, after it determined it was not superior to the one from Equity Commonwealth.
Two prominent shareholder advisory firms, Institutional Shareholder Services Inc. and Glass Lewis & Co., disagreed and recommended shareholders reject Equity Commonwealth’s deal, arguing Starwood’s bid offered superior value.
Monmouth investor Blackwells Capital, which offered to buy the company itself in December, has said it believes the company is worth between $26 and $30 a share. It has also nominated four directors to Monmouth’s board.
Blackwells urged investors to reject the Equity Commonwealth deal, reconstitute the board and launch a new strategic review that would maximize value for shareholders.
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