BWP to takeover Newmark in $250m deal

Bunnings warehouses landlord BWP Trust has flagged a merger with Newmark Property in a $250 million deal set to create an 84-asset portfolio worth $3.5 billion.

Perth-based BWP Trust today announced it had entered a bid implementation bid for an off-market takeover of Newmark REIT Management Limited, the parent entity of Newmark Property REIT.

The merger represents a total equity value of $246.8 million and a total enterprise value of $517.4 million, BWP said.

Under the all-scrip transaction proposal, Newmark security holders will receive 0.4 BWP unit for every Newmark share held at an implied price of $1.39 each.

The merger price is at a 43 per cent premium to Newmark’s closing price of 97 cents on Tuesday.

BWP said Wesfarmers tenants would make up 82 per cent of its tenants, with the merger estimated to create a $3.5 billion portfolio of 84 properties across the country.

Newmark’s nine retail assets are predominantly leased to Wesfarmers tenants including Bunnings, Officeworks and Kmart.

BWP Management managing director Mark Scatena said the proposed merger reflected BWP’s focus on growing its portfolio through assets with strong location and tenant convenants.

“The merger proposal demonstrates the trust’s ability to leverage its capital structure and disciplined focus on portfolio growth, consistent with our objective of providing unitholders with a secure and growing income stream and long-term capital growth,” he said.

Newmark Property REIT (NPR) chairman Michael Doble said the proposal represented a highly attractice offer for NPR securityholders.

"The consideration reflects a material premium to NPR’s trading price and provides an opportunity to participate in a larger merged group with lower gearing, which is particularly compelling given the ongoing elevated interest rate environment and market uncertainty," he said.

"After careful consideration, the independent board committee has concluded that the proposal is in the best interests of NPR securityholders and unanimously recommends that NPR securityholders accept the BWP takeover offer, in the absence of a superior proposal.”

In its announcement, BWP said the Newmark board directors intend to accept the merger proposal in the absence of a superior proposal.

Newmark REIT Management Limited, Newmark Group and other entities controlled by the group or its shareholders have also entered into a pre-bid acceptance deed with BWP to back the proposed merger.

The collective group holds 32.6 million NPR shares, representing an 18.3 per cent voting power in the business.

BWP also agreed to pay Newmark $22.5 million to acquire 100 per cent of the shares in Newmark REIT Management Limited under a sale and purchase agreement that relies on the merger proposal being declared.

BWP engaged Highbury Partnership as financial adviser and Corrs Chambers Westgarth as its legal adviser for the merger proposal.