abrdn Euro Logistics - Strategic Review

abrdn European Logistics Income

27/11/2023 07:00

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RNS Number : 6693U  abrdn European Logistics Income plc  27 November 2023

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

 

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS
AND MERGERS (THE "CODE") AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM
INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO
CERTAINTY THAT ANY FIRM OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY
FIRM OFFER MIGHT BE MADE.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

Date: 27 November
2023

 

For Immediate Release

 

abrdn European Logistics Income plc

Strategic Review, Formal Sale Process and Commencement of Offer Period

 

abrdn European Logistics Income plc (the "Company") was launched in December
2017 with the investment objective of providing an attractive level of income
and capital growth from investing in high quality mid-box and urban logistics
real estate in Continental Europe. The Company's investment proposition at
launch was largely centred on the premise that e-commerce penetration in
Europe was significantly behind the UK, and that the forecast growth to follow
would provide an attractive backdrop to an investment in high-quality European
logistics real estate.

The Investment Manager has delivered on this strategy on behalf of the
Company, utilising its local asset managers to establish a portfolio of 26
operational mid-box and urban logistics real estate assets, diversified across
the Netherlands, France, Germany, Spain and Poland, valued at €659.75
million. The portfolio WAULT is 7.2 years to break and 8.6 years to expiry,
with approximately two thirds of the current rental income subject to full
uncapped indexation¹. The portfolio is highly modern, with 16 of the 26
assets constructed since 2018 and the Company was recently awarded a maximum
five stars in the 2023 GRESB awards, achieving 89/100 points and first place
in its peer group.

While the broader investment proposition remains cogent, the Board recognises
that the Company, like many of its peers across the wider listed real estate
sector, faces a number of challenges, at both a macro and company specific
level. The Company's annual target dividend of 5.64 cents (€) per share
remains materially uncovered, and a reduction in this target level would be
required to achieve a fully covered, sustainable dividend in the foreseeable
future. With a market capitalisation of £234 million² and an IFRS Net Asset
Value of €411.3 million³, the Company remains of a size which might deter
some potential investors due to lower share liquidity and a higher relative
cost base, despite the Company benefiting from a competitive investment
management fee arrangement. In addition, the Company's shares have continued
to trade at a significant and persistent discount to net asset value per
share, which the Board and Investment Manager believe does not reflect the
long-term prospects of the portfolio.

In line with its constitutional terms as set out on launch in December 2017,
the Company is required to propose a continuation vote at its next Annual
General Meeting, expected to be held in June 2024. With that in mind, and
cognisant of the feedback received from a number of shareholders in recent
meetings, the Board believes that the current point in time represents an
appropriate juncture at which to consider more fully the basis on which the
Company might best proceed, having regard for the best interests of
shareholders as a whole.

Accordingly, the Board today announces that it is undertaking a strategic
review of the options available to the Company (the "Strategic Review"). The
Board will consider all options available to the Company that offer maximum
value for its shareholders including, but not limited to, undertaking some
form of consolidation, combination, merger or comparable corporate action,
selling the entire issued share capital of the Company (which would be
conducted under the framework of a "formal sale process" in accordance with
the City Code on Takeovers and Mergers (the "Code")), and selling the
Company's portfolio and returning monies to shareholders. There is no
certainty that any changes will result from the Strategic Review and, for the
avoidance of doubt, a continuation of the Company's current investment
strategy with a rebased target dividend level is a potential outcome of the
Strategic Review.

Tony Roper, Chairman, abrdn European Logistics Income plc, commented: "The
Board's priority at all times is to act in the best interests of shareholders.
Whilst we retain a strong conviction in the strategy, today's proactive
decision to launch a strategic review largely reflects the unprecedented macro
backdrop that real estate companies are operating against and provides greater
optionality to deliver shareholder value."

The Board has appointed Investec Bank plc ("Investec") as Financial Adviser to
manage the Strategic Review and formal sale process. Investec is acting as
Rule 3 adviser to the Company under the Code.

The Board will make further announcements in due course.

 Enquiries

 Investec Bank plc (Financial Adviser and Corporate Broker)                                             +44 (0) 20 7597 4000

 David Yovichic

 Denis Flanagan

 FTI                                                                                                    +44 (0) 20 3727 1000
 Consulting

                                                                                                      aseli@fticonsulting.com (mailto:aseli@fticonsulting.com)
 Dido Laurimore

 Richard Gotla

 James McEwan

 

Formal Sale Process and Code considerations

 

The Takeover Panel has agreed that any discussions in relation to an offer for
the Company may be conducted within the context of a formal sale process under
the Code (as referred to in Note 2 on Rule 2.6 of the Code), which will enable
conversations with parties interested in making a proposal to take place on a
confidential basis.

Accordingly, the Takeover Panel has granted a dispensation from the
requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Code such that any
interested party participating in the formal sale process will not be required
to be publicly identified as a result of this announcement and will not be
subject to the 28 day deadline referred to in Rule 2.6(a) of the Code for so
long as it is participating in the formal sale process. Following this
announcement, the Company is now considered to be in an "offer period" as
defined in the Code, and the dealing disclosure requirements of Rule 8 of the
Code as summarised below will apply.

Parties interested in submitting an expression of interest or any other
proposal relating to any strategic option for the Company should contact the
Company's Financial Adviser, Investec, using the contact details above. It is
currently expected that any party interested in submitting any form of
proposal for consideration in connection with the Strategic Review (including
within the formal sale process) will, at the appropriate time, enter into a
non-disclosure agreement and standstill arrangement with the Company on terms
satisfactory to the Board and on the same terms, in all material respects, as
other interested parties before being permitted to participate in the process.
The Company then intends to provide such interested parties with certain
information on its business, following which interested parties shall be
invited to submit their proposals to Investec. The Company will update the
market in due course regarding timings for the formal sale process.

The Board reserves the right to alter any aspect of the process as outlined
above or to terminate the process at any time and, in such cases, will make an
announcement as appropriate. The Board also reserves the right to reject any
approach or terminate discussions with any interested party at any time.

Shareholders are advised that this announcement does not represent a firm
intention by any party to make an offer under Rule 2.7 of the Code and there
can be no certainty that any transaction may be concluded or any offers will
be made or sale proposed as a result of the formal sale process, nor as to the
terms on which any offer or other transaction may be made. The Company
confirms that it is in discussions with a potential offeror at the date of
this announcement.

Other Notices

 

Investec Bank plc, which is authorised in the United Kingdom by the Prudential
Regulation Authority and regulated in the UK by the Financial Conduct
Authority and the Prudential Regulation Authority, is acting exclusively for
the Company and no one else in connection with the Strategic Review and shall
not be responsible to anyone other than the Company for providing the
protections afforded to clients of Investec, nor for providing advice in
connection with the Strategic Review or any matter referred to herein. Neither
Investec nor any of its affiliates (nor any of its or their respective
directors, officers, employees, representatives or agents) owes or accepts any
duty, liability or responsibility whatsoever (whether direct, indirect,
consequential, whether in contract, in tort, under statute or otherwise) to
any person who is not a client of Investec in connection with the Strategic
Review, this announcement, any statement contained herein or otherwise.

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise.

The release, publication or distribution of this announcement in jurisdictions
outside the United Kingdom may be restricted by laws of the relevant
jurisdictions and therefore persons into whose possession this announcement
comes should inform themselves about, and observe, such restrictions. Any
failure to comply with the restrictions may constitute a violation of the
securities law or any such jurisdiction.

Disclosure Requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the persons interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror(s), save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website
at www.thetakeoverpanel.org.uk, (http://www.thetakeoverpanel.org.uk/)
 including details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified. You should
contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are
in any doubt as to whether you are required to make an Opening Position
Disclosure or a Dealing Disclosure.

Publication on a website

 

In accordance with Rule 26.1 of the Code, a copy of this announcement will,
subject to certain restrictions relating to persons resident in restricted
jurisdictions, be available on the Company's website
at https://www.eurologisticsincome.co.uk/ no later than 12 noon (London
time) on the business day following the date of this announcement. Neither the
content of any website referred to in this announcement nor the content of any
website accessible from hyperlinks is incorporated into, or forms part of,
this announcement.

 

Rule 2.9 of the Code

 

In accordance with Rule 2.9 of the Code, the Company confirms that as at the
close of business on 24 November 2023 it has in issue 412,174,356 ordinary
shares of one penny each in the capital of the Company. The International
Securities Identification Number for the Company's ordinary shares is
GB00BD9PXH49. The Company holds no ordinary shares in treasury.

 

MAR

 

This announcement is released by the Company and the information contained
within this announcement is deemed by the Company to constitute inside
information for the purposes of Article 7 of the UK version of the EU Market
Abuse Regulation (Regulation (EU) No.596/2014) which forms part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended. Upon the
publication of this announcement via a Regulatory Information Service, such
information is now considered to be in the public domain.

 

 

LEI Number

The Company's LEI Number is 213800I9IYIKKNRT3G50

 

¹ Portfolio statistics as at 30 September 2023

² Market capitalisation as at 24 November 2023

³ As at 30 September 2023

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