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Singapore-based ESR-REIT and ARA Logos Logistics Trust have proposed a S$1.4bn ($1bn) merger that involves ESR acquiring all of ARA Logos’ units in exchange for cash and new units. The transaction will be effected by way of a trust scheme of arrangement with a new entity called ESR-Logos REIT being formed. Holders of ARA Logos will receive a consideration of S$0.95 per ARA Logos unit. This comprises S$0.095 in cash and 1.6765 new ESR-REIT units to be issued at S$0.51 per unit. As per Business Times, the proposed transaction implies a gross exchange ratio of 1.863. Pro forma estimates suggest that the merger will be accretive for both ESR-REIT and ARA Logos’ DPUs for FY2020, assuming the merger was completed by 1 January 2020. If approved, the new entity will have S$5.4bn in total assets across 87 properties in Singapore and Australia and 41 properties owned through investment funds in Australia. ESR-REIT holders representing over 50% and ARA Logos holders representing 75% of the votes will have to agree on the deal for it to go through.

ESR REIT’s SGD 4.6% Perps traded stable at 99.13 yielding 5.47%.

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