LandSec to Buy Developer U+I Group for $259 Million

(Bloomberg) -- Land Securities Group Plc has reached an agreement to buy rival U.K. developer U+I Group Plc for about 190 million pounds ($259 million) in cash, according to a statement Monday.

The 149-pence-a-share offer has been recommended by U+I’s board and represents a 73% premium to the company’s closing price on Friday. U+I, which specializes in regenerating run-down neighborhoods, has a pipeline of development projects that need funding. 

LandSec has been looking to pivot away from its traditional model focused on retail properties and developing London office projects. The company has begun targeting so-called mixed use developments that include housing and other uses across the U.K. U+I has major ongoing projects at Mayfield in Manchester and Morden Wharf in London’s Greenwich district.

Shares of U+I were trading up 72% at 1:30 pm in London. LandSec shares were down 0.5% to 683.60 pence. 

“The acquisition recognises the value from combining U+I’s front-end development capabilities, placemaking skills and portfolio of core regeneration projects which require funding, with Landsec’s development expertise and strong balance sheet,” the company said in the statement. 

The deal “demonstrates management’s desire to implement its new strategy and the pace at which it wants to achieve that change,” analysts at RBC Capital Markets wrote in a note about the transaction. “We believe its new strategy will create value, but that a key concern among investors is that it will take a significant time to become evident.” The firm has an Outperform rating on the stock. 

Rothschild was sole financial adviser to U+I and UBS Group AG to LandSec, according to the statement.

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