UK property developer St Modwen accepts new offer from US private equity group | Properties of St Modwen
Property developer St Modwen has accepted an increased offer from US investor Blackstone which values ââthe company at Â£ 1.3bn, in the latest example of a private equity deal for a mid-sized UK firm.
St Modwen accepted a price of 560 pence per share in a final offer of the Blackstone vehicle. The offer was 25% higher than the share price of 448 pence per share the day before New York-based Blackstone’s first disclosure of interest in early May. Shares rose 0.5% Thursday morning to 554p.
Private equity investors from outside the UK were already sitting on big piles of money before the pandemic and have since pounced on UK companies, which are believed to be undervalued, in part because of uncertainty over whether a Brexit trade deal with the EU would be reached.
Other UK companies targeted by US investors include supermarket chain Morrisons, senior aerospace manufacturer and infrastructure investor John Laing. Foreign private equity investors have invested more so far in 2021 than in any year since 2007, according to Dealogic, a data company.
St Modwen, a member of the FTSE 250 index of mid-sized companies, struggled during the coronavirus pandemic, losing Â£ 120million in the year through the end of November after depreciating the value of residential land and business assets at the start of closures.
The company was already reducing its exposure to physical retail sites and office buildings, as well as land reclamation projects such as the old MG Rover factory at Longbridge in the West Midlands. Rather, it focuses on two areas that have benefited from pandemic trends: the boom in online deliveries and house prices. Investments in warehouses have jumped in value. Around Â£ 1.37 billion in logistics assets accounted for 49% of its portfolio value at the end of 2020, a sharp increase from 40% in 2019. In the housing sector, St Modwen is targeting 25% growth for 2021.
St Modwen shareholders have successfully argued that Blackstone’s initial offer of 542 pence per share was too low, only slightly above the company’s high valuation before the pandemic of 530 pence per share. The shares fell to almost 300p per share in 2020.
Blackstone said the terms of the latest offer were final, but that it reserves the right to bid higher if another potential buyer enters the framework.