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LondonMetric and Schroder Real Estate finalise their £404m all-share bid for Picton Property

Companies

LondonMetric (LMP) and Schroder Real Estate (SREI) have finalised their recommended all-share bid for Picton Property Income (PCTN). As announced in the revised offer this month, PCTN shareholders will receive 0.190 LMP and 0.894 SREI shares per PCTN share, currently worth 78.7p, an 8.2% discount to the net asset value at 30 June.

The 20-year-old company put itself up for sale in January having concluded it lacked sufficient scale to attract institutional investors. The following month it said LMP had expressed interest with the £4.7bn consolidator in May announcing a joint bid with SREI in which it holds 11.1%, a stake that will fall to 5.7% after the acquisition.

SREI will take 54%, or £382m, of Picton’s property assets to lift its current £224m market value above that of rival Custodian Property Income (CREI) to make it the largest real estate investment trust in the dwindling AIC UK Commercial Property sector. LMP will take 46%, or £320m, of properties plus £24m of cash.

PCTN issued a second quarter trading update alongside the takeover agreement showing net tangible assets per share dipped by 0.7% to 101.5p in the three months to 30 June.

Our view

Richard Williams, senior analyst at QuotedData, said: “Many shareholders will feel let down by PCTN’s board’s decision to accept the offer from the LMP and SREI consortium at this level, especially given that it had been so adamant that the market had been undervaluing the company and its prospects when it put itself up for sale at the start of the year when trading at a c.23% discount to NAV. The situation in the Middle East has not helped the outlook for the sector, but it feels like a deal at an 8.2% discount is leaving too much on the table and giving away too much of the upside in the portfolio. While PCTN’s largest shareholder has backed the offer, we have heard from many unhappy shareholders, so it will be interesting to see the outcome of the vote.”

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Written By Gavin Lumsden

Head of News

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This website is for information purposes only and is not intended to encourage the reader to deal in any mentioned securities. QuotedData is a trading name of Marten & Co Limited, which is authorised and regulated by the Financial Conduct Authority. Some of the content in this website is sponsored and, although it abides by Content Principles and Objectives, (/about-quoteddata/research-principles-objectives/) it is considered non-independent. Investments may involve a significant degree of risk, including loss of capital. The value of an investment and the income from it could go down as well as up. The return of your investment is not guaranteed, and you may get back less than you originally invested. Past performance is not an indicator of future performance. It is important that you read the Terms and Conditions (/about-quoteddata/terms-and-conditions/) before considering any investment.

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