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Investing.com -- Belgian healthcare real estate firms Aedifica (EBR:AOO) and Cofinimmo (EBR:COFB) announced plans to merge, creating what they say will be Europe’s largest real estate investment trust (REIT) and the fourth largest globally, with a combined gross asset value of €12.1 billion ($13.8 billion).
Shares in Cofinimmo advanced more than 2% in European trading on the announcement.
The deal is expected to generate operational synergies of around €16 million and boost EPRA earnings per share for shareholders of both companies, according to a joint statement released Tuesday.
"Complementary geographic footprints, aligned strategic focus on healthcare, and comparable portfolio sizes, earnings profiles, and capital structures will provide a strong foundation for value creation," the companies said.
Under the terms of the agreement, Aedifica is offering 1.185 of its new shares for each Cofinimmo share. The proposal follows a previous offer made in May, when Aedifica proposed an exchange ratio of 1.16 shares, representing a premium of more than 20% over Cofinimmo’s share price at the time.
The boards of both companies have unanimously endorsed the merger. Upon completion, Cofinimmo chair Jean Hilgers is set to take over from Aedifica’s Serge Wibaut as chair of the new group.
"This is a positive outcome, in our view. We expect this merger to go through as we see strong support from investors following the discussions that we had recently," Jefferies analysts commented in a note.
The analysts expect the transaction to remain mid-single-digit accretive at the EPS level and broadly neutral at the net asset value (NAV) level, despite the higher exchange ratio.
Jefferies recently downgraded both Aedifica and Cofinimmo, citing strong share performance driven by renewed investor interest in healthcare names and the pending outcome of the proposed merger.
The exchange offer is expected to open for acceptance around September 1. The merged entity will keep its primary listing on Euronext (EPA:ENX) Brussels and remain part of Belgium’s blue-chip index.