Veris Residential rebuffs Kushner Cos $4.3 bln takeover bid-sources
03/11/2022 10:00
By Svea Herbst-Bayliss
NEW YORK, Nov 3 (Reuters) - Veris Residential Inc
VRE.N 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, two
people familiar with the matter said.
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 $22 a share would be more appropriate.
A letter to Kushner, reviewed by Reuters, 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 said, adding the bid "denies
Veris Residential shareholders the substantial value expected"
as the company undergoes a strategic transformation.
The offer for Veris, formerly called Mack-Cali Realty Corp,
comes as the real estate sector is struggling with rising costs
and a downturn in demand due to higher home prices and mortgage
rates.
Veris' eight person board is sending its response to Kushner
only hours before management is sure to get questions about the
bid on its third quarter earnings call, scheduled for Thursday
morning.
A representative for Kushner did not immediately respond to
a request for comment.
For Veris this marks the fourth time this year that Kushner,
run by Charles Kushner - the father of former President Donald
Trump's son-in-law Jared Kushner - has made approaches. Each
time Veris' board, made up of new directors after two recent
proxy contests, held in-person meetings and telephone
conversations with Kushner Cos, the people 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.
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)
((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))