The independent proxy advisory agency recommends that holders of Cominar units support the proposed sale of the Quebec real estate investment fund announced in October.
Institutional Shareholder Services (ISS) believes that the premium offered to unitholders is comparable to those observed in similar transactions, that the sale process is adequate, and that the all-cash transaction provides certainty in terms of value.
“Support for the transaction is justified,” concludes ISS in its decision presented on Friday.
Cominar revealed on October 24 an agreement with a consortium led by Canderel surrounding its sale at a unit price of $ 11.75 per share, a transaction valued at 5.7 billion including debt.
The offer represents a 63% premium over the closing price on the last trading day preceding the disclosure of the proposed transaction.
As part of this transaction, the consortium is to resell commercial and office buildings to Groupe Mach and some 190 industrial buildings to the US investment firm Blackstone.
While supporting the transaction, ISS admits in its ruling that the lack of transparency surrounding the price paid for industrial properties is of concern since the consortium’s offer for Cominar is at a discount to the price of the net asset value in the market. time of the announcement, which amounted to $ 14.72 per share.
“Given the structure of the transaction, unitholders could reasonably expect to have a better understanding of how their investment was valued by the various parties involved in the transaction,” ISS emphasizes.
Montreal asset manager Letko Brosseau had rightly recalled publicly that unitholders did not have all the information necessary to fully assess the offer made to them. ” Despite requests from shareholders and analysts, the company has disclosed neither the price at which Blackstone will acquire the industrial properties from Cominar nor the price at which the buying consortium will acquire its share of the assets ”, one can read in a document produced by Letko Brosseau at the beginning of December.
According to the institutional investor who owns a 3.3% stake in Cominar, “the time seems ill-suited to make this proposal since Cominar is just emerging from the pandemic which has led to long closures of shopping malls and offices in 2020 and 2021. Cominar’s stock has fallen significantly compared to its pre-pandemic level and has not yet recovered all the ground lost ”.
If Cominar has come under criticism in recent weeks, Press learned that at least two groups were trying to put together competing bids ahead of the special meeting of unitholders scheduled for December 21.
The arrangement concluded by the consortium led by Canderel came at the end of a strategic review process lasting more than 13 months, notably launched due to financial difficulties at Cominar and when the pandemic caused additional uncertainty surrounding the activities.
During the review process, Cominar’s advisers formally approached 33 parties (25 financial investors and 8 strategic investors) potentially interested in all or portions of the business. Seven financial investors and three strategic have signed confidentiality agreements allowing for due diligence.
Cominar owns 310 industrial, commercial and office buildings in Quebec and Ontario.