(Bloomberg) – A group of investors from Columbia Property Trust Inc. made an unsolicited proposal to acquire the U.S. real estate investment trust in a cash transaction valued at approximately $ 2.24 billion. Columbia shares soared on the news.
The investor group said in a letter to Columbia board of directors that they made the no-obligation offer for $ 19.50 per share on Thursday, a report from Bloomberg News confirmed. The price represents a 25% premium over the Wednesday the company’s shares closed.
The group, made up of Arkhouse Partners LLC, Sapir Organization and 8F Investment Partners Pte. Ltd. consists. Ltd. said it already owns around 3.3% of the company.
“We believe our proposal will provide shareholders in the company – many of whom have suffered from years of erosion – an attractive opportunity to obtain immediate liquidity at a complete and fair valuation,” the group said in the letter. The letter was signed by Gavriel Kahane, Chief Executive Officer of Arkhouse, Alex Sapir, CEO of Sapir, and Stephane Farouze, Chairman of 8F Investment.
Columbia rose 10.2% to $ 17.22 at 10:59 a.m. on Thursday in New York, giving the company a market value of approximately $ 2 billion.
Columbia confirmed in a statement Thursday that it had received the proposal and said it would evaluate it with its legal and financial advisors to determine the best course of action for the company and its shareholders.
The investor group said they have hired advisors and established a term sheet for funding from an undisclosed alternative investment management firm with approximately $ 50 billion in assets under management, which is subject to standard due diligence. It is also open to discussion about the involvement of the company’s officers, employees and stakeholders in the transaction, although this is not a condition of the proposal.
“Our proposal delivers full value, beyond what the company can expect in the years to come based on the anticipated public market challenges and the stated plans of management. We also believe our proposal would benefit the company’s officers and employees with whom we would like to work to grow the company long term in the more forgiving, more stable private marketplace, ”the group said.
The group said it was ready to move forward with due diligence that could be carried out at the same time as the deal was closed. It said it believed it could appear within the next 45 to 60 days.
Shares have been under pressure in recent years. They are down about 28% over the past five years, according to Bloomberg data, although they are up around 25% in the 12 months leading up to Wednesday’s close of trading.
Columbia announced earlier this week that Arkhouse has appointed six directors to its nine-member board. The company determined that none of the nominees was suitable because they share overlapping business interests and have no experience on public boards and management. Columbia has made its own list of nine directors and states that it has the right strategy and leadership to add value to shareholders.
Columbia also said Monday that since its initial investment, Arkhouse has focused on trying to acquire or force a sale of the company. The company said chief executive officer Nelson Mills met with Kahane earlier this month, where Kahane Mills proposed that, with assistance from Arkhouse and others, lead a management buyout of the company. Kahane did not state whether he had adequate funding at the time.
Columbia said it had offered to have confidential talks with Arkhouse under a standard nondisclosure agreement. The offer to continue the talks was rejected. Columbia said Arkhouse’s goal was to maintain the option of running a proxy context and “use the promotion of a proxy competition to force the company into a sale in which Arkhouse could participate.”
“In order to work constructively with the board of directors, Arkhouse has decided not to announce its nomination for several weeks in order to begin a substantive, private discussion with Columbia management about a mutually beneficial solution that is in the best interests of the shareholders. We remain ready to discuss a negotiated solution that includes the withdrawal of the nomination, ”said the group.
According to its website, Columbia owns, operates, and develops properties in New York, San Francisco, Washington DC, and Boston. It has an office portfolio of 15 properties with more than six million square feet of rental space, plus four other properties under development.
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