Gazit Globe's Equity One to merge with Regency

Chaim Katzman
Chaim Katzman

Chaim Katzman: This deal will create the largest shopping center company in the US.

Gazit-Globe Ltd. (NYSE: GZT; TASE: GLOB) reports that its US subsidiary Equity One (NYSE: EQY) has entered into a merger agreement with Regency Centers Corporation (NYSE: REG). The company says that the merger will create the largest high quality shopping center REIT in the US, with a combined equity market cap of approx. $11.7 billion and enterprise value of approximately $15.6 billion.

Gazit-Globe's share price is currently up 6.46% on the Tel Aviv Stock Exchange.

Gazit-Globe will be the largest shareholder in the merged company and will hold approximately 13.2% of the shares. Chaim Katzman, Chairman of Gazit, who has until now served as chairman of Equity One, will serve as vice chairman of the merged company. Two independent directors from Equity One board will also be added to the board of Regency. The share exchange transaction reflects a $4.6 billion equity value for Equity One and represents an approximately 13.7% premium (as of November 14, 2016). The transaction is expected to close in the first quarter or early in the second quarter of 2017, and is anticipated to generate a net gain of approximately NIS 1 billion for Gazit Globe, or NIS 5 per share. It is also subject to certain closing conditions, including shareholder approval of both companies.

Gazit Globe states in its announcement, "This transaction will create a better, stronger and more diversified company for all shareholders. The merged entity will create additional value through the following key factors: the combined company with a portfolio of complimentary assets will have an enhanced presence in both the real estate and capital markets; the merged company will have 5.4 million square meters of leased GLA; operational efficiencies and synergies in assets and property management, as well as corporate G&A is expected to exceed NIS 100 million annually; the merger will strengthen the company’s position vis-à-vis its tenants, as well as its leasing and asset management activities."

The benefits listed for Gazit Globe shareholders from the transaction are: "Generates a significant premium above market value of Equity One’s shares for all shareholders; a net gain of NIS 1 billion to Gazit Globe, NIS 5 per share; as a result of the merger transaction the annual dividend from the merged entity will immediately increase by approximately 2.3% for all Equity One shareholders; reduces leverage on a stand-alone basis; Gazit Globe corporate level cost and accounting expense savings of approximately NIS 6 million NIS annually; improved liquidity of its shares, with an expected combined daily trading liquidity in excess of $80 million; greater geographic and tenant diversification leading to a significant reduction in the risk profile of the combined company; Gazit-Globe will be the largest shareholder in the merged company; a merger transaction which does not carry any immediate tax consequences."

Chaim Katzman said, "I am very pleased with this merger transaction announced today. This is a major deal that will create the highest quality and largest shopping center company in the US. Equity One shares acquired by Regency at a premium of 13.7% to the market price is a reflection of the quality of Equity One's assets and the faith of Regency in the company’s full potential.

"Equity One has grown for two and a half decades from a single asset worth $4.5 million to now being merged with Regency in a transaction that results in an implied market capitalization of $4.6 billion. The merged company will be the largest of its kind in North America with assets of more than $15 billion and Gazit-Globe will be its largest shareholder. This transaction creates value for Equity One’s shareholders including Gazit Globe and I am confident that we will continue to maximize value for our shareholders as well as for all shareholders of our subsidiaries in the future.”

Published by Globes [online], Israel business news - www.globes-online.com - on November 15, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Chaim Katzman
Chaim Katzman
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