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LondonMetric bids for A&J Mucklow

LondonMetric bids for A&J Mucklow – The boards of directors of LondonMetric and Mucklow have reached agreement on the terms of a recommended offer. LondonMetric will acquire the entire issued and to be issued ordinary share capital of Mucklow by means of a scheme of arrangement under Part 26 of the Companies Act. For each Mucklow ordinary share, Mucklow shareholders will be entitled to receive:
2.19 New LondonMetric Shares
and
204.5 pence in cash

On the basis of the closing price per LondonMetric share of 205.8 pence on 22 May 2019, the deal values each Mucklow share at 655.2 pence and the entire issued share capital of Mucklow at approximately GBP414.7 million.

The deal represents a premium of approximately:

  • 19.7 per cent. to Mucklow’s closing share price (547.5 pence); and
  • 11.4 per cent. to an estimated Mucklow NAV per share of 588 pence.

Rationale

Over a number of years, LondonMetric has successfully re-positioned its portfolio away from operational retail, office and residential property towards sectors with sustainable and growing income that benefit from structural shifts and changing consumer shopping habits namely distribution, long income and convenience-led retail property.

Distribution warehousing has grown to represent 72.5 per cent. of LondonMetric’s portfolio and, driven by the growth in online shopping, the demand/supply dynamics in this sector has helped LondonMetric to deliver strong income led total returns. Over a six year period to 31 March 2019, LondonMetric has more than doubled net rental income and EPRA Earnings per share whilst delivering a total accounting return of 102 per cent.. Total shareholder return over the same period was 156 per cent., compared to 57 per cent. for the FTSE 350 Real Estate Super Sector.

Similarly, Mucklow has built a portfolio focused on distribution and industrial assets, delivering strong property and shareholder returns focused on income and income growth. The LondonMetric Directors believe that the combination of Mucklow and LondonMetric will enable LondonMetric to grow its distribution and urban logistics portfolio further, accelerate active asset management opportunities across the Mucklow portfolio, combine management expertise, increase scale and deliver enhanced income-led shareholder returns.”

LondonMetric results

LMP’s results for the year ended 31 March 2019 were also published this morning – the EPRA NAV rose to 174.9p from 165.2p. Earnings per share were 8.8p against 8.5p last year. The dividend was 8.2p, up from 7.9p (Mucklow shareholders won’t get the latest LMP quarterly dividend). Total accounting return of 10.7% and property return of 9.0%, outperforming IPD All Property by 440bps (4.4%). GBP163.3m acquired, predominantly urban logistics which has grown to represent 27.3% of the portfolio, and GBP238.2m disposed, predominantly mega and regional distribution as well as retail parks which represents just 4.7% of the portfolio.

LMP / MKLW : LondonMetric bids for A&J Mucklow

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