SINGAPORE (Mar 11): The unitholders of both Frasers Logistics Trust (FLT) and Frasers Commercial Trust (FCOT) have approved the proposed merger of the two entities for a price tag of $1.54 billion. 

The total consideration for the proposed merger comprises $138.1 million in cash and some 1,128.1 million consideration units.

The deal would see FCOT unitholders receive $1.68 for each FCOT unit held at the REIT’s books closure date. This constitutes 15.1 cents per unit in cash and 1.233 new FLT units at an issue price of $1.240 per unit, representing a gross exchange ratio of 1.355 times.

In separate extraordinary general meetings on Wednesday, both REITs had called for a vote on the merger proposal. The duo had also called for trading halts prior to market open. 

For FLT, some 99.85% of unitholders voted for the merger, while 98.61% of FCOT’s unitholders were in favour of the merger. 

The merger, which was first announced in December last year, would see FLT acquire all units of FCOT in exchange for a combination of cash and new units in FLT. 

The REIT managers had also said that the merger would create an enlarged REIT with a total portfolio worth a total of $5.7 billion. The merged entity was also slated to be one of the top 10 largest S-REITs by market capitalisation, with greater index representation on the FTSE EPRA/NAREIT Index.

See: Frasers Logistics & Industrial Trust to acquire Frasers Commercial Trust for $1.54 bil in proposed merger

See: FLT, FCOT eye merger as growth stalls in Australia and Europe while mark-to-market issues surface

Back in December, the managers of both FLT and FCOT had lauded the merger as one that would boost the capabilities of both REITs by boosting growth and delivering value to shareholders. 

“The merger will be a win-win transaction for both FLT and FCOT unitholders, delivering DPU accretion and greater growth prospects,” said Robert Wallace, chief executive officer of FLT’s manager.

“It enhances our financial capacity and flexibility to pursue acquisitions through our expanded mandate and a right of first refusal (ROFR) pipeline in excess of $5.0 billion,” added Wallace. 

Jack Lam, CEO of FCOT’s manager had termed the merger a “transformational” one for both parties, allowing the REITs to tap on each other’s strengths to create a more resilient and diversified platform. 

“With the combined portfolio, we will be able to unlock synergies and explore new opportunities in the logistics, industrial and commercial sectors,” added Lam. 

In conjunction with the proposed merger, FLT had also announced the proposed acquisition of 50% interest in Farnborough Business Park (FBP) from a wholly-owned subsidiary of its sponsor Frasers Property for an estimated price tag of £90.1 million ($157.7 million). 

FBP is a 46.5 ha freehold high-quality business park located in the Thames Valley in the United Kingdom. It reportedly has a net lettable area of approximately 50,882 sqm, committed occupancy rate of 99.1% and weighted average lease expiry (WALE) of 6.8 years as at end-September 2019. 

The acquisition was also put forth at the extraordinary general meeting. 99.76% of FLT unitholders had voted in favour of the4 acquisition. 

Units in Frasers Logistics Trust and Frasers Commercial Trust closed flat at $1.23 and $1.62 respectively on Wednesday.