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The Swedish publicly traded real estate company SBB is planning a NOK 30 billion offer for Entra, which has engaged ABG Sundal Collier as its financial advisor.
IN THE GAMES: Come in and CEO Sonja Horn can get new owners.
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SBB, listed on Nasdaq Stockholm, is offering NOK 165 per share for the former state-owned real estate company Entra. The offer sets the price of Entra at just over NOK 30 billion.
It appears from a stock exchange announcement on Tuesday.
The offer corresponds to a premium of 15 percent on Monday’s closing price. The report also indicates that it is an enhanced version of an offering that SBB has previously shared with the Entra board.
A settlement will be offered to Folketrygdfondet, the Ministry of Commerce and Industry and the other shareholders of Entra in the form of NOK 115.5 per share in cash, and NOK 49.5 in the form of shares of the Stockholm-listed SBB.
SBB, which stands for ‘Samhällsbyggnadsbolaget i Norden’, has a market capitalization of SEK 31 billion.
“We want Entra to be part of SBB and join us in our ambition to create the leading social infrastructure company in Europe, a company with a unique, attractive and stable real estate portfolio with long-term leases, high occupancy and a diversified and high-quality tenant base throughout the Nordic region, “says SBB CEO Ilija Batljan in the message.
OFFERS IN: SBB and CEO Ilija Batljan
Jenny Lagerqvist
Offer number two
The Swedish-Montenegrin Batljan founded SBB in 2016. In a Klassekampen article from January this year, he is described as “the former Social Democratic politician who has made a fortune buying public property in Sweden.”
At the same time, the article highlighted the company’s growth ambitions in Norway.
SBB was also described as having raised money non-traditionally through so-called hybrid bonds, perpetual loans on which the company pays interest.
SBB accounts for perpetual loans as equity and the method has been approved by the US credit rating agency Standard & Poor with a negative BBB rating.
According to Tuesday’s stock exchange announcement, a combination of SBB and Entra will create a player with 131 billion SEK in gross property values by the end of the third quarter.
At the same time, SBB estimates that pre-tax synergies amount to SEK 260 million per year. The offer is conditional on the acceptance of more than 90 per cent of the shares, due diligence and the approval of the Norwegian competition authorities.
It is further noted that SBB wishes to cooperate with Entra to agree on a “friendly settlement”.
“To that end, SBB has recently shared the terms of the offer with the Entra board of directors, which is a significant improvement over a previous offering that was shared privately with the Entra board,” the report said.
“While SBB respectfully awaits a recommendation from the Entra board of directors, SBB has chosen to announce its intention to launch an offer in order to give Entra shareholders the opportunity to accept it before the turn of the year.”
Assuming 100 percent acceptance of the offer, existing SBB shareholders will end up with about 83.5 percent of the company’s total shares, while Entra shareholders will receive about 16.5 percent.
SBB’s stock is down just under two percent after the breakout rose at lunchtime.
You have hired a consultant
Entra stock reached a preliminary peak of NOK 165.20 in February, but fell below NOK 100 in the wake of the outbreak of the crown crisis.
Since then, the price has risen above 40 percent, and on Tuesday the stock rose a further 11.4 percent to 160 kronor, five kroner below the advertised offer.
Sonja Horn, CEO of Entra, informs E24 that the company’s board of directors has engaged ABG Sundal Collier as an advisor in the process.
A key task for the brokerage firm will be to attract the interest of alternative bidders and thereby increase the price.
The state has been sold
DNB Markets analyst Simen Mortensen told Finansavisen today that he saw several current Entra bidders.
– There are three listed companies in Sweden that are the main candidates: Castellum, SBB and Balder. But I don’t think we should leave out other private actors, Mortensen told the newspaper.
Entra develops, rents and manages commercial real estate throughout Norway, and has a real estate portfolio of 90 properties with 1.3 million square meters, valued at NOK 52 billion at the end of the third quarter.
Read on E24 +
Stock Market Commentary: The State May Have Made the Best Trade in Entra
The public sector represents 59 percent of the rental portfolio. The company was originally formed in 2000 through the Storting’s decision to separate the office building business in Statsbygg.
In October 2014, Entra went public in connection with a government sale of 100 to 49.6 percent. In recent years, the state, through the Ministry of Commerce and Industry, has sold further down through several rounds and today owns 8 percent of the shares.
At the same time, Folketrygdfondet acquired Entra last year and is now the largest owner with 12% of the shares.
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