REG - LXI REIT PLC LondonMetric - Possible All-Share Merger of LXI and LMP

Londonmetric PropertyAnnouncement

18/12/2023 14:45

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RNS Number : 1909X  LXI REIT PLC  18 December 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 AND 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 IN RELATION TO LONDONMETRIC
PROPERTY PLC AND LXI REIT PLC

 

FOR IMMEDIATE RELEASE

 

18 December 2023

 

Possible All-Share Merger of

 

LondonMetric Property plc

 

and

 

LXi REIT plc

 

The boards of LondonMetric Property plc ("LondonMetric") and LXi REIT plc
("LXi") note the recent media speculation and confirm that they are in
discussions regarding a possible all-share merger of the two companies,
pursuant to which LondonMetric would acquire the entire issued and to be
issued ordinary share capital of LXi (the "Possible Merger").

 

The making of any firm offer by LondonMetric is subject to a number of
pre-conditions, waivable at LondonMetric's discretion. These pre-conditions
include the completion of mutual due diligence, the provision of certain
consents, waivers and approvals by each company's lenders and the
recommendation of the Possible Merger to LXi's shareholders by the Board of
LXi.

 

The boards of LondonMetric and LXi see the potential to bring together two
companies with complementary strategic approaches and a key focus on
delivering compounding income-led total shareholder returns through the cycle.
The Possible Merger would result in:

 ●    A UK-focused triple net lease REIT of scale with a pro forma gross asset value
      of approximately £6.4 billion and market capitalisation of approximately
      £3.9 billion which is expected to provide improved share liquidity and better
      access to capital;
 ●    A combined portfolio aligned to structurally supported sectors (with
      approximately 93% exposure to the logistics, healthcare, convenience,
      entertainment and leisure sectors) and with income longevity and security; and
 ●    An internally managed REIT delivering economies of scale and operating
      efficiencies, targeting sustainable earnings and dividend progression.

 

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. A further announcement will be made in
due course.

 

Important Code Notes

 

In accordance with Rule 2.6(a) of the Code, LondonMetric must by no later than
5.00 pm (London time) on 15 January 2024, either announce a firm intention to
make an offer for LXi in accordance with Rule 2.7 of the Code or announce that
it does not intend to make an offer for LXi, in which case the announcement
will be treated as a statement to which Rule 2.8 of the Code applies. This
deadline can only be extended with the consent of the Panel on Takeovers and
Mergers (the "Panel") in accordance with Rule 2.6(c) of the Code.

 

This announcement has been made with the consent of LondonMetric.

 

As a consequence of this announcement an offer period (as defined in the Code)
has now commenced in respect of LXi and the attention of shareholders is drawn
to the disclosure requirements of Rule 8 of the Code which are summarised
below.

 

The bases and sources for certain financial and other information contained in
this announcement are set out below.

 

 

 Enquiries for LondonMetric:

 Barclays Bank PLC, acting through its Investment Bank (Lead Financial Adviser
 and Joint Corporate Broker)
 Bronson Albery                                                  +44 20 7623 2323

 Callum West

 Peel Hunt LLP  (Financial Adviser and Joint Corporate Broker)
 Capel Irwin                                                     +44 20 7418 8900

 Carl Gough

 J.P. Morgan Securities plc (Financial Adviser and Joint Corporate Broker)
 Ashish Agrawal                                                  +44 20 7742 4000

 Jonty Edwards

 FTI Consulting (Communications Adviser)
 Dido Laurimore                                                  +44 20 3727 1000

 Richard Gotla

 Andrew Davis

 Enquiries for LXi:

 Lazard & Co., Limited  (Lead Financial Adviser)
 Patrick Long                                                    +44 20 7187 2000

 Jolyon Coates

 Jefferies International Limited  (Financial Adviser and Corporate Broker)
 Rishi Bhuchar                                                   +44 20 7029 8000

 Tom Yeadon

 H/Advisors Maitland (Communications Adviser)
 James Benjamin                                                  +44 20 7379 5151

 Rachel Cohen

Inside information

 

The information contained within this announcement is deemed by LondonMetric
and LXi to constitute inside information as stipulated under the Market Abuse
Regulation (EU) No.596/2014 (as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018) ("MAR"). On the publication of this
announcement via a Regulatory Information Service, such information is now
considered to be in the public domain.

 

For the purposes of MAR, this announcement is being made on behalf of
LondonMetric by Jadzia Duzniak, Company Secretary, and on behalf of LXi by
Nicola Lambourne, Company Secretary.

 

Notices related to financial advisers

 

Barclays Bank PLC ("Barclays"), acting through its investment bank, which is
authorised by the PRA and regulated in the United Kingdom by the FCA and the
Prudential Regulation Authority (the "PRA"), is acting exclusively as
financial adviser to LondonMetric and no one else in connection with the
matters set out in this announcement and will not be responsible to anyone
other than LondonMetric for providing the protections afforded to clients of
Barclays nor for providing advice in relation to the matters set out in this
announcement.

 

In accordance with the Code, normal United Kingdom market practice and Rule
14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act
as exempt principal trader in LondonMetric and LXi securities on the London
Stock Exchange. These purchases and activities by exempt principal traders
which are required to be made public in the United Kingdom pursuant to the
Code will be reported to a Regulatory Information Service and will be
available on the London Stock Exchange website at www.londonstockexchange.com.
This information will also be publicly disclosed in the United States to the
extent that such information is made public in the United Kingdom.

 

Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United
Kingdom by the FCA, is acting exclusively for LondonMetric and for no one else
in connection with the matters referred to in this announcement and will not
be responsible to any person other than LondonMetric for providing the
protections afforded to clients of Peel Hunt, nor for providing advice in
relation to the matters referred to herein. Neither Peel Hunt nor any of its
affiliates owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Peel Hunt in connection with
the matters referred to in this announcement, or otherwise.

 

J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United
Kingdom by the PRA and regulated in the United Kingdom by the PRA and the FCA.
J.P. Morgan Cazenove is acting as financial adviser and corporate broker
exclusively to LondonMetric and no one else in connection with the Possible
Merger and will not regard any other person as its client in relation to the
Possible Merger and will not be responsible to anyone other than LondonMetric
for providing the protections afforded to clients of J.P. Morgan Cazenove or
its affiliates, nor for providing advice in relation to the Possible Merger or
any other matter or arrangement referred to herein.

 

Lazard & Co., Limited ("Lazard"), which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority (the "FCA"), is acting
exclusively as financial adviser to LXi and no one else in connection with the
Possible Merger and will not be responsible to anyone other than LXi for
providing the protections afforded to clients of Lazard nor for providing
advice in relation to the Possible Merger or any other matters referred to in
this announcement. Neither Lazard nor any of its affiliates (nor any of their
respective directors, officers, employees or agents), owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any person who is
not a client of Lazard in connection with the Possible Merger, this
announcement, any statement contained herein or otherwise.

 

Jefferies International Limited ("Jefferies"), which is authorised and
regulated in the UK by the FCA, is acting exclusively for LXi and no one else
in connection with the Possible Merger and shall not be responsible to anyone
other than LXi for providing the protections afforded to clients of Jefferies,
nor for providing advice in connection with the Possible Merger or any matter
referred to herein. Neither Jefferies 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 Jefferies in
connection with the Possible Merger, this announcement, any statement
contained herein or otherwise.

 

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 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), 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 Panel's website at
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.

 

Forward-looking statements

 

This announcement and certain oral statements made regarding the Possible
Merger and other information published by LondonMetric or LXi containing
statements about LondonMetric, LXi and/or the combined group are or may be
deemed to be forward-looking statements. All statements other than statements
of historical facts included in this announcement, may be forward-looking
statements. Without limitation, any statements preceded or followed by or that
include the words "targets", "plans", "believes", "expects", "aims",
"intends", "hopes", "continues", "would", "could", "should", "will", "may",
"anticipates", "estimates", "projects" or words or terms of similar substance
or the negative thereof, are forward-looking statements. Forward-looking
statements include statements relating to the following: (i) future capital
expenditures, expenses, revenues, earnings, synergies, economic performance,
indebtedness, financial condition, dividend policy, losses and future
prospects; and (ii) business and management strategies and the expansion and
growth of LondonMetric, LXi or the combined group's operations and potential
cost and operating synergies resulting from the Possible Merger. These
forward-looking statements are not based on historical fact and are not
guarantees of future performance. By their nature, such forward-looking
statements involve known and unknown risks and uncertainties that could
significantly affect expected results and are based on certain key
assumptions. Many factors could cause actual results to differ materially from
those projected or implied in any forward-looking statements. Many of these
risks and uncertainties relate to factors that are beyond the entities'
ability to control or estimate precisely. These factors include, but are not
limited to, changes in political and economic conditions, changes in levels of
capital investment, success of business and operating initiatives, the impact
of any acquisitions or similar transactions, changes in tenants' strategies
and stability, changes in the regulatory environment and fluctuations of
rates, and changes in tax rates. Except as expressly provided in this
announcement, they have not been reviewed by the auditors of LondonMetric or
LXi. Neither LondonMetric, LXi, nor any of their respective members,
associates or directors, officers, employees or advisers, provides any
representation, assurance or guarantee that the occurrence of the events
expressed or implied in any forward-looking statements in this announcement
will actually occur. Neither LondonMetric, LXi, nor any of their respective
members, associates or directors, officers, employees or advisers assumes any
obligation to update or correct the information contained in this announcement
except as required by applicable law (including as required by the Takeover
Code, the Listing Rules and the Disclosure Guidance and Transparency Rules).
Due to such uncertainties and risks, readers are cautioned not to place undue
reliance on such forward-looking statements, which speak only as of the date
of this announcement. LondonMetric and LXi disclaim any obligation to correct
or update any forward-looking or other statements contained in this
announcement, except as required by applicable law or by the rules of any
competent regulatory authority, whether as a result of new information, future
events or otherwise.

 

Rule 26.1 disclosure

 

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
made available, subject to certain restrictions relating to persons resident
in restricted jurisdictions, free of charge on LondonMetric's website at
www.londonmetric.com and on LXi's website at www.lxireit.com by no later than
12 noon (London time) on the business day following the date of this
announcement.

 

For the avoidance of doubt, the content of the website referred to in this
announcement is not incorporated into, and does not form part of, this
announcement.

 

Rule 2.9 disclosure

 

In accordance with Rule 2.9 of the Code, as at the close of business on 15
December 2023 (being the business day prior to the date of this announcement),
LondonMetric confirms that it had in issue 1,089,596,222 ordinary shares of 10
pence per share, each with voting rights and admitted to trading on the Main
Market of the London Stock Exchange under the ISIN code GB00B4WFW713.

 

In accordance with Rule 2.9 of the Code, as at the close of business on 15
December 2023 (being the business day prior to the date of this announcement),
LXi confirms that it had in issue 1,714,473,236 ordinary shares of 1 pence per
share, each with voting rights and admitted to trading on the Main Market of
the London Stock Exchange under the ISIN code GB00BYQ46T41.

 

Additional Information

This announcement is for information purposes only and is not intended to, and
does not, constitute, represent 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, or the solicitation of any vote or
approval in any jurisdiction, pursuant to this announcement or otherwise. Any
offer, if made, will be made solely by certain offer documentation which will
contain the full terms and conditions of any offer, including details of how
it may be accepted. The release, publication or distribution of this
announcement in jurisdictions other than the United Kingdom and the
availability of any offer to shareholders of LXi who are not resident in the
United Kingdom may be affected by the laws of other relevant jurisdictions.
Therefore, any persons who are subject to the laws of any jurisdiction other
than the United Kingdom or shareholders of LXi who are not resident in the
United Kingdom will need to inform themselves about, and observe, any
applicable requirements. Any failure to comply with the restrictions may
constitute a violation of the securities law of any such jurisdiction.

 

This announcement does not constitute a prospectus or prospectus equivalent
document. Neither LondonMetric nor LXi shareholders should make any investment
decision in relation to the Possible Merger except on the basis of the scheme
document or combined circular and prospectus published by LondonMetric in due
course. If a firm offer is made for LXi, LondonMetric and LXi urge both
LondonMetric and LXi shareholders to read the whole of the scheme document and
combined circular and prospectus once available, as each will contain
important information relating to the Possible Merger.

 

This announcement has been prepared in accordance with English law and
information disclosed may not be the same as that which would have been
prepared in accordance with the laws of jurisdictions outside of the United
Kingdom.

 

Profit forecasts and estimates

 

No statement in this announcement is intended to constitute a profit forecast
or profit estimate and no

statement in this announcement should be interpreted to mean that the earnings
or future earnings per share of or dividends or future dividends per share of
LondonMetric and/or LXi for current or future financial years will necessarily
match or exceed the historical or published earnings or dividends per share of
LondonMetric or LXi, as appropriate.

 

Bases and sources

 

In this announcement, unless otherwise stated or the context otherwise
requires, the following bases and sources have been used.

 

 ●    The pro forma market capitalisation is based on the closing share price (being
      the closing middle market price on a particular trading day as derived from
      the London Stock Exchange Daily Official List) and issued share capital for
      each of LondonMetric and LXi as at 15 December 2023, being the last business
      day prior to the date of this announcement.

 ●    The financial information relating to LondonMetric is extracted from its
      interim results for the half-year ended 30 September 2023, released on 23
      November 2023.

 ●    The financial information relating to LXi is extracted from its interim
      results for the half-year ended 30 September 2023, released on 30 November
      2023.

 ●    Combined portfolio statistics have been derived from figures in the sources
      referenced above.

 ●    Combined sector exposure statistics have been derived from the
      reclassification of both LondonMetric's and LXi's historic asset classes (each
      as set out in the interim results of each company for the period ended 30
      September 2023) into revised asset classes using criteria which LondonMetric
      would propose to use for the combined portfolio following a Possible Merger.

 ●    Certain figures in this announcement have been subject to rounding
      adjustments.

 

 

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