Less than a year after businessperson Teddy Sagi acquired a 44% controlling interest in real estate company Brack Capital Properties NV (TASE: BCNV), he is selling it. German company Adler Real Estate today reported that it had contracted an agreement to buy Sagi's entire current 41.04% stake in Brack for NIS 1.4 billion.
The deal is at NIS 440 per share, reflecting a 12.3% premium on the closing stock market price. Sagi acquired his stake in Brack in May 2017 at NIS 345 million a share, which means that he made a NIS 300 million profit on his investment.
According to Adler's announcement, the agreement is contingent on Adler's acquisition of at least 5% of Brack Capital's shares through a special offer to purchase for the public at NIS 440 per share in order to give Adler a controlling interest. Adler will publish its offer to purchase this Sunday for up to 25.8% of the shares in Brack Capital held by the public. The acquisition and the offer to purchase are contingent on approval of the acquisition by the German Federal Cartel Office.
Brack Capital co-CEOs Ofer Rahamim and Gal Tenenbaum and economy division head Fred Ganea have undertaken to offer all their holdings (5.63%) for sale in the framework of the offer to purchase. Adler undertook to buy the rest of these shares if it does not buy them as part of the offer to purchase. Based on these agreements, Adler plans to attain a holding of 70% of Brack Capital's shares.
Brack Capital holds, develops, and manages real estate properties in Germany. Approximately two thirds of its properties portfolio consists of residential properties in leading areas (A). The remaining properties include 330,000 square meters of commercial real estate. The supply of housing units includes over 11,000 rental apartments in growing markets, with an estimated €45 million in annual rent. Brack Capital also engages in residential real estate development in Dusseldorf and Aachen, and has sold, built, and designed over 13,000 housing units.
Adler is one of the leading residential real estate companies in Germany and one of the five largest public companies in this sector. It focuses on real estate development in German metropolitan areas. As a result of Adler's strategy, almost half of its rental revenue comes from properties in the 10 cities in which it is most active, and two thirds of its revenue comes from the 20 cities in which it is most active. Adler manages over 50,000 housing units.
Adler finished the first nine months of 2017 with €130.5 million in revenue, a €120 million operating profit, and a €24 million net profit. The company's portfolio properties have an aggregate worth of €2.6 billion and a 91.1% occupancy rate.
Adler is listed on the Frankfurt Stock Exchange at a €742 million ($928 million) market cap, and its share price has reached a five-year peak of €13.
Adler said that it would finance its acquisition of shares from its cash on hand and revenue from the sale of its share of its stake in Accentro Real Estate. Adler also emphasized that it was not ruling out the possibility of acquiring all of the public's holdings in Barak Capital in the medium-to-long term.
Tenenbaum said, "The fruitful cooperation with Teddy Sagi, who has widespread business connections and great financial capabilities, generated large added value for all of Brack Capital's shareholders. The deal with Adler is great for all the shareholders, who will receive a large premium on the equity and share price amounting to an effective control premium. Those who choose to retain their shares will benefit from the enhanced value that Adler's management, with which we have been familiar for many years, will create by utilizing synergy and economies of scale."
Published by Globes [online], Israel Business News - www.globes-online.com - on February 18, 2018
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