AFFINE (EPA:IML) - Plan to create a large property company by merging Société de la Tour Eiffel (STE) and Affine
Transparency directive : regulatory news
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Paris, 28 September 2018, 7.30 p.m.
Plan to create a large property company by merging Société de la Tour Eiffel
(STE) and Affine
* Property portfolio of over EUR1.7bn
* Stronger geographic positions in the Greater Paris Area and in large regional
* Market capitalisation close to EUR750m
* Increased free float accounting for EUR100m and 14% of the share capital of
STE after the merger
* The SMA group controlling shareholder of STE would hold after the merger 51%
of capital and voting rights
* Holdaffine would sell its 7% stake in STE as soon as possible after the
* Completing the merger is specifically dependent on the AMF decision stating
that there is no requirement to file of a buyout offer on Affine shares as
well as on the voting by the board of directors and the general assembly of
both companies of the merger agreement
The respective boards of Société de la Tour Eiffel ("STE") and Affine R.E.
("Affine") have approved the project of a merger. This operation would create a
property company listed on Euronext Paris, with French SIIC (REIT) status and
assets exceeding EUR1.7bn.
The contemplated merger would take the form of a merger-absorption of Affine by
STE on the basis of an exchange ratio of one new STE share for three Affine
shares. This ratio was arrived at following a multi-criteria analysis performed
by the advising banks and will be submitted to the merger assessors. An
extraordinary general meeting of the shareholders of each of the two companies
would be convened to vote on the final project in December 2018. In accordance
with existing regulations, an information document registered by the AMF
(French Stock Exchange Regulator) and the merger agreement along with the
report by the merger assessors would be made available to shareholders.
The proposed exchange ratio would entail:
- for STE shareholders, an accretion of the EPRA NAV per share on 2018 H1
- for Affine shareholders, a premium (+0.8% over 1 month average share prices
and +3.0% over 3 month average share prices) on September 28, 2018 and the
dividend policy being maintained as the proposed ratio is in line with the
dividend ratio (for 2017, STE paid a EUR3.0 per share dividend and Affine a
EUR1.0 per share dividend).
A STRONGER AND LARGER PORTFOLIO
On completion of the merger, STE would have a portfolio of 163 assets with an
appraisal value excluding transfer duties on 30/06/2018 of EUR1,747m. Assets
located in the Greater Paris Area would account for 75% of the portfolio, the
other assets being in the French regions, more than 16% of them in large
regional cities located on good national and international transport networks
and which are demographically and economically dynamic: Bordeaux, Nantes,
Lille, Lyon, Marseille and Toulouse. The Greater Paris Area part of the
portfolio would be enhanced by the first quality buildings brought by Affine
located within the Paris city limits.
During recent developments of both portfolios, technological changes, service
requirements, quality standards and a sustainable development approach expected
by tenants were taken into account.
Annual rental revenues would grow to over EUR100m, making it possible to
increase redevelopment transactions and to exploit land reserves. Such
value-creating transactions would allow for improvements of the performances
and the sustainability of the portfolio. STE will pursue Affine's policy aiming
at focusing on strategic assets; it will therefore conduct an assessment of its
portofolio of assets after the merger in order to decide on its disposals.
(1) Based on the EPRA NAV of STE of EUR54.8 per share et Affine of EUR20.0 per
STE and Affine have first quality teams whose members, thanks to the
complementary fit between their technical and professional skills, would give
the new company the human resources it needs to fulfil its ambitions.
STE's Loan to Value ratio would be 46%(2) with average debt maturity of 6.3
years and a spot cost of 2.1%. These figures should allow the company to ensure
sustained growth on attractive terms. STE's current debt which is made up of
Euro PP bonds and Revolving credit facilities would be complemented by Affine's
mortgage lines (up to the secured debt ratios authorised at STE).
Affine has issued subordinated perpetual notes (TSDIs) for EUR75m whose issuing
contract does not include reimbursement in the event of a merger, with STE
automatically replacing Affine in the continued fulfilment of the terms and
conditions of the issuing memorandum. As is required by law, TSDI holders would
be consulted on the planned merger and benefit from the statutory opposition
right granted to claim holders.
STE would also automatically replace Affine in terms of its obligations to the
holders of the ORA bonds that it has issued (EUR3.6m).
Affine shareholders with double voting rights would be consulted in a special
meeting convened to approve the planned merger and the consecutive loss of
their double voting rights. It is recalled that Holdaffine and concert SMABTP
and SMAvie BTP hold 45.98% and 15.15% of Affine voting rights respectively.
The composition of the board of directors of STE would be altered in order to
take the dynamics of this merger into account.
Maryse Aulagnon, who wishes to launch new concepts in the real estate sector,
has not requested to participate in the governance of STE and Holdaffine, which
she controls, would sell its STE shares received from the merger.
Alain Chaussard, Affine's Deputy Chairman and Holdaffine co-shareholder, would
be tasked with assisting STE's General Management with integrating Affine's
teams and operations. He would also be appointed as a non-voting director on
TIMETABLE AND TERMS AND CONDITIONS
Approval of the merger agreement by the boards of directors, provision of
Document E and of the merger assessor(s) report and convening of the general
meetings of Affine and STE shareholders, as well as the special general meeting
of Affine shareholders with double voting rights, should take place by end of
October/early November, which means that the merger could be completed during
December. Document E would include pro forma financial information on a
consolidated basis presenting the financial situation of STE as the absorbing
company on completion of the transaction. The transaction would be subject to
standard conditions precedent, and in particular the decision issued by the AMF
stating that there is no requirement to file a buy-out bid on Affine's shares
on the basis of article 236-6 of the General Regulations of the AMF.
Maryse Aulagnon, founding Chairwoman of Affine, said: "Affine has completed the
major part of its programme to simplify and reposition itself as an office
property company specialising in Paris and the most dynamic large regional
cities. The link-up with STE will enable Affine's team and shareholders to take
the project forward with new synergies and greater visibility". She added that
"Holdaffine, Affine's reference shareholder since 1998, considers that it has
achieved what it set out to do in its role of supporting Affine with the
achievement of the simplification strategy launched 5 years ago, the last stage
of which is the disposal of Banimmo; accordingly, Holdaffine intends to sell
its stake in STE, which would be around 7% of the share capital, as soon as
possible following completion of the merger. The sale will be carried out among
a restricted circle of investors in blocks of shares over the counter and
off-market so as not to weigh on the STE share price. Holdaffine has already
received expressions of interest covering a large part of its stake, as an
evidence of the relevance and the potential of the planned merger".
(2) Computed from the total asset value excluding transfer taxes of EUR1,159m
for STE and EUR588m for Affine as at 30 June and net finacial debt of EUR467m
for STE and EUR343m for Affine
Hubert Rodarie, Chairman of STE, added: "The merger with Affine should enable
STE to strengthen its model of a long-term SIIC property company, owner and
developer of tertiary real estate, to support its tenant clients in business
parks located in the Greater Paris Area and the most dynamic regions. This
transaction would enable STE to take great strides forward in the
implementation of its growth strategy and to consolidate its dividend which
will be based on an enhanced asset portfolio."
An information meeting/conference call in French is scheduled following the
issue of Document E. Information concerning this meeting/conference call will
be published on the companies' websites: www.societetoureiffel.com et
STE has mandated Rothschild & Cie as its exclusive financial advisor and Paul
Hastings as its legal advisor. Affine has mandated BNPParibas as its exclusive
financial advisor and Davis Polk & Wardwell as its legal advisor.
Warning: This press release is being issued for information purposes
exclusively. It does not constitute a public offer to sell or the solicitation
of a public offer to buy securities in France or in any other jurisdiction. The
securities mentioned in this press release will not be subject to any public
offer or promotional solicitation.
The securities referred to in this press release are not being offered for sale
in France in the context of a private placement within the meaning of article
L. 411-2-II of the French Monetary and Financial Code.
No assurance is given regarding the information contained in this press
release, its completeness, its accuracy or its reasonableness. The information
contained in this press release may change in line with the aforementioned
merger documents and in particular Document E. Accordingly, any obligation or
undertaking to update, review or modify any information contained in this press
release is excluded.
Affine is a property company specialising in commercial real estate. At the end
of June 2018, it directly owned 41 buildings with a total value of EUR588,
(excl. transfer taxes) for a total surface area of 248,400 sqm. The Company
owns office properties (72%), retail properties (22%) and warehouses and
industrial premises (6%). Its assets are distributed more or less equally
between Ile-de France and other regions in France.
Affine is also the major shareholder (49.5%) of Banimmo, a Belgian property
repositioning company with operations in Belgium and France. At the end of June
2018, Banimmo had total assets of 9 office and commercial buildings, with a
value of EUR143m (transfer taxes included).
Total Group assets are EUR769m (including transfer taxes).
In 2003, Affine opted for French real estate investment trust (SIIC) status.
Affine's shares are listed on Euronext Paris (Ticker: IML FP/BTTP.PA; ISIN
code: FR0000036105). It is included in the CAC Mid&Small, SIIC and IEIF
indexes. Banimmo is also listed on Euronext.
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