Colonial & Axiare Create Property Giant Worth €11.1 Bn

Inmobiliaria Colonial and the socimi Axiare mergerInmobiliaria Colonial and the socimi Axiare merger

Inmobiliaria Colonial announced at the market close on Tuesday that its board and that of the socimi Axiare have approved the merger of both companies. The integration still has to be ratified at the respective shareholder meetings. It will be carried out via a share exchange: 1,8554 shares of Colonial for each share of Axiare.

The exchange implies a premium of 6.42% to the closing price of Colonial and Axiare in the stock market on Tuesday (9,43 and 16,50 euros per share respectively). The two companies have respective reports prepared by independent experts (JP Morgan and Credit Suisse) which determine that the share exchange established is “reasonable.” 

The merger process will take place in the second half of 2018 and will mean that Axiare will be liquidated. All its assets and liabilities will be passed over to Colonial in a block. As a result of the takeover bid, which was completed on February 2, Colonial now has 86.8% of Axiare’s capital. So the share exchange will be earmarked for shareholders who hold the remaining 13.20% of shares, which are still trading on the market.

With the merger, Colonial aims to “consolidate the company’s position in the ‘prime’ office sector, simplify and optimise its organisational and funcional structure, and improve its financial structure,” according to what was said in the merger document submitted to the Stock Market Regulator (CNMV).

Colonial said it wants “to respond to the current challenges in the property sector by strengthening its competitive position and extending its business in Spain and making it more efficient.”  It said the operation will bring “significant synergies and a reduction in operating costs.” A property giant will be created worth 11.1 billion euros.

Colonial shares are  losing 2% on Wednesday, while those of Axiare are up 1%.