Business · Companies · 2 hrs ago
Opposition grows to H&R REIT takeover bid involving its CEO
A $3.4-billion takeover bid for H&R REIT is facing opposition from several institutional investors.
H&R is a Toronto-based real estate investment trust, and the proposed buyers include GO Residential REIT and H&R chief executive Tom Hofstedter.
Hofstedter’s family company would buy Canadian properties, while GO REIT would acquire H&R’s U.S. properties.
Critics say the terms favour Hofstedter and his family over other H&R unitholders, though two investment dealers have called the deal fair.
Proxy advisers are expected to weigh in within two weeks, and passive funds that own 13 per cent of H&R’s units may rely on their recommendations.
Unitholders are due to vote on Nov.
13, and negative recommendations could put the deal at risk or send the parties back to negotiations.
The buyers could revise the terms to offer more cash or tax benefits to H&R unitholders.
A proposed $3.4-billion takeover of H&R Real Estate Investment Trust is facing growing opposition from institutional investors.
The offer is from a consortium led by GO Residential Real Estate Investment Trust and includes H&R chief executive Tom Hofstedter.
Critics say the deal favours Hofstedter and his family company, CRAL, at the expense of other H&R unitholders.
H&R unitholders are scheduled to vote on the takeover on Nov. 13.
Recommendations from proxy advisory firms ISS and Glass Lewis are expected within two weeks and could influence the vote.
- Who
- The bidders include GO Residential Real Estate Investment Trust and H&R chief executive Tom Hofstedter. Some institutional investors oppose the offer.
- What
- A proposed $3.4-billion takeover of H&R REIT is facing growing opposition.
- When
- The deal was announced in August. Unitholders are scheduled to vote on Nov. 13.
- Where
- H&R is based in Toronto, and its units trade on the Toronto Stock Exchange.
- Why
- Critics say the terms favour Hofstedter and his family company, CRAL, over other H&R unitholders.
H&R takeover opponents
GO REIT and Tom Hofstedter
Deal fairness
H&R takeover opponents
Mill Pond Capital said the offer favours Hofstedter and his family at the expense of other unitholders. RBC analyst Jimmy Shan said it involves a disproportionate transfer of residual value to CRAL.
GO REIT and Tom Hofstedter
CIBC Capital Markets and National Bank Financial have said the transaction is fair to H&R unitholders.
H&R, GO REIT and Tom Hofstedter announced the transaction.
Several institutional investors opposed the offer, and H&R filed a takeover circular.
Raymond James estimated a 75-per-cent probability that ISS would recommend voting against the offer and a 60-per-cent probability for Glass Lewis.
H&R units closed at $9.72 on the Toronto Stock Exchange, while GO REIT units closed at US$8.
- Proposed acquisition value
- $3.4-billion
- H&R units held by Mill Pond Capital
- 2.2 million
- H&R unitholder vote
- Nov. 13
- Canadian assets CRAL is purchasing
- Book value of $1.98-billion; purchase price of $1.56-billion
- Caledon properties sold
- $436-million
- Toronto office building sold
- $81.5-million
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What people are saying
Negative recommendations could derail the transaction, force the parties back to the negotiating table or accelerate a renewed asset monetization strategy under potentially new leadership.
Post circular review, we struggle to see how HR unitholders will approve the deal