Veris Residential rebuffs Kushner Cos $4.3 bln takeover bid-letter (updated)
03/11/2022 14:01
(Adds response from Kushner, analysts' view on price)
By Svea Herbst-Bayliss
NEW YORK, Nov 3 (Reuters) - Veris Residential Inc
VRE.N said on Thursday it is rejecting an unsolicited bid from
Kushner Cos. to buy or externally manage the real estate
investment trust, calling the offer too low and saying it lacks
financing details.
Kushner last month proposed to pay $16 a share for Veris,
which specializes in New Jersey and Boston rental apartments.
The bid values Jersey City, New Jersey-headquartered Veris at
about $4.3 billion, including debt. Analysts have said a price
between $21.50 and $26 a share would be more appropriate.
A letter to Kushner says the price undervalues the company
and that the board has serious doubts about Kushner's ability to
complete any transaction. It notes the board is ready to review
all takeover bids from Kushner or anyone else as long as they
are fully financed.
"The Board unanimously rejects Kushner Companies'
unsolicited proposal," the letter, released by the company,
said.
The letter, contents of which were first reported by
Reuters, added the bid "denies Veris Residential shareholders
the substantial value expected" as the company undergoes a
strategic transformation.
Kushner, run by Charles Kushner - the father of former
President Donald Trump's son-in-law Jared Kushner, said on
Thursday that the bid "is fully capitalized and committed."
It added: "this leadership team has no clear long term plan
to maximize the value of the portfolio, nor are they the right
team to execute." There was no response to Veris' point that the
price was too low.
The offer for Veris, formerly called Mack-Cali Realty Corp,
comes as the real estate sector is struggling with rising costs
and a drop in demand due to higher home prices and mortgage
rates.
Veris' eight-person board sent its response to Kushner only
hours before management held its third quarter earnings call on
Thursday morning.
For Veris this marks the fourth time this year that Kushner
has made approaches. Each time its board, made up of new
directors after two recent proxy contests, held in-person
meetings and telephone conversations with Kushner Cos, people
familiar with the matter said.
Kushner Cos. said in a public presentation that the Veris
board has "repeatedly rebuffed proposals", adding that Veris
directors have "presided over a multi-year record of financial
and operational mismanagement."
The Veris directors pushed back hard against Kushner's most
recent offer because it failed to say who would put together the
debt and equity capital to complete the deal, the letter said.
Financing conditions have become more difficult this year as
lenders are pulling back amid fears of rising interest rates and
slowing growth.
Previously, Veris' financial advisors found that Kushner's
potential equity partners were not ready to sign onto any deal.
"This inability to substantiate your capital casts serious
doubt on Kushner Companies' ability to complete any meaningful
transaction with the Company," the Veris letter said.
The board also rejected Kushner's offer to externally manage
Veris, arguing an "external management structure would be
deleterious to the Company's intrinsic value and severely limit
its strategic flexibility."
Veris' stock price, which is down more than 18% since
January, closed trading at $15.27 on Wednesday.
Last month Westminster Management, Kushner's property arm,
agreed to pay a $3.25 million civil penalty and restitution to
settle a 2019 lawsuit in Maryland for overcharging tenants and
failing to maintain properties, the Maryland attorney general
said.
(Reporting by Svea Herbst-Bayliss; editing by Richard Pullin
and Tomasz Janowski)
((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))