Enhanced Consideration with 0.713x Exchange
Ratio and Option to Receive Cash
Offers Monmouth Shareholders a Combination
of Certainty and Opportunity for Future Upside
Total Value Represents 23.1% Premium Over
Monmouth’s 30-Day Average Unaffected Trading Price as of December
18, 2020
Shareholders Urged to Vote “FOR” the Amended
Transaction on the WHITE Proxy Card
Equity Commonwealth (NYSE: EQC) and Monmouth Real Estate
Investment Corporation (NYSE: MNR), or Monmouth, today announced
that they have entered into an amendment to the definitive merger
agreement (as amended, the “Merger Agreement”) between the two
companies. Under the terms of the Merger Agreement, Equity
Commonwealth revised its offer to pay a total value of $19.00 per
share in a combination of cash and stock at the election of
Monmouth shareholders and based on EQC’s closing price of $26.65
per share on August 13, 2021. Total consideration for the
transaction is $3.4 billion, including the assumption of $857
million of mortgage debt, and the repayment of the $550 million of
Monmouth’s 6.125% Series C Redeemable Preferred Stock and
Monmouth’s outstanding line of credit and term loan.
The new cash component provides greater certainty of value and
an opportunity for liquidity for Monmouth’s shareholders. The
revised offer increases the exchange ratio from 0.67x to 0.713x,
representing a 6.4% premium over the previous all-stock offer and a
23.1% valuation premium to Monmouth’s 30-day average unaffected
trading price as of December 18, 2020.
“Our revised offer provides Monmouth shareholders with the
option to elect to receive consideration in cash, but also provides
a tax-deferred option to remain invested in the future upside of
our business,” said David Helfand, President, Chief Executive
Officer and Trustee of Equity Commonwealth. “We will continue to
have significant balance sheet capacity, of over $4 billion, for
future industrial investments.”
Monmouth shareholders will have the option to elect to receive,
for each Monmouth common share, either (i) $19.00 of cash or (ii)
0.713 shares of EQC stock. Pursuant to the terms of the Merger
Agreement, the aggregate cash consideration will be $641 million
and the transaction will result in the issuance of 46.2 million EQC
common shares. In the event Monmouth shareholders, in the
aggregate, elect to receive in excess of $641 million in cash or
46.2 million EQC shares, the cash and stock consideration will
become subject to proration. Depending on the extent of proration,
a Monmouth shareholder electing the cash consideration will receive
no less than $6.50 in cash for each Monmouth common share with the
balance paid in EQC common shares. A Monmouth shareholder electing
the stock consideration will receive no less than 0.469 shares of
EQC common shares, representing a value of $12.50 per share based
on EQC’s closing share price of $26.65 on August 13, 2021, with the
balance paid in cash.
“Over Monmouth’s more than 50-year history, and particularly
over the last several months as part of our robust strategic
alternatives process, Monmouth’s Board and management team have
successfully maximized value for shareholders,” said Michael P.
Landy, President and CEO of Monmouth. “The Monmouth Board is
pleased to unanimously support this improved transaction, which
provides greater value and optionality to address the preferences
of our diverse shareholder base. With this revised agreement,
Monmouth shareholders will have the option to choose a superior,
immediate cash premium, or tax-efficient equity consideration
enabling them to participate in the value and cash flow upside of
the combined platform. We are confident that together with EQC, our
combined company will be a market leading industrial REIT
well-positioned for sustainable growth and long-term value
creation.”
The revised transaction structure, with the issuance of fewer
EQC common shares, is expected to result in significant improvement
in per share earnings metrics for the combined company as compared
to earnings under the original all-stock transaction. In addition,
the dividend per share is expected to be higher under the revised
transaction due to fewer EQC common shares outstanding post
transaction. It is anticipated that the transaction will be
tax-deferred to Monmouth common shareholders to the extent they
receive common stock as consideration. In connection with the
revised offer, the termination fee will increase by approximately
$10 million to $72 million.
Equity Commonwealth and Monmouth shareholders are expected to
own approximately 73% and 27%, respectively, of the pro forma
company following the close of the transaction.
Transaction Timing &
Approval
The Board of Trustees of Equity Commonwealth and the Board of
Directors of Monmouth Real Estate have each unanimously approved
the amended Merger Agreement.
The virtual special meetings of EQC shareholders and MNR
shareholders previously scheduled to be held on August 24, 2021 at
10:00 a.m. and 11:00 a.m. Eastern Time, respectively, have been
rescheduled for August 31, 2021 at 10:00 a.m. and 11:00 a.m.
Eastern Time, respectively. MNR shareholders wishing to participate
in the live webcast of the MNR Special Meeting must pre-register at
www.cesonlineservices.com/mnr21_vm by 11:00 a.m., Eastern Time, on
August 30, 2021.
Both Monmouth and EQC shareholders are encouraged to submit a
WHITE proxy card or voting instruction form to vote their common
shares as promptly as possible. For specific instructions on how to
vote shares, please review the applicable instructions that are set
forth in the joint proxy statement/prospectus. Shareholders who
have questions about the merger or how to submit their proxy,
should contact EQC’s proxy solicitor D.F. King & Co., Inc., at
(877) 783-5524 or Monmouth’s proxy solicitor, Okapi Partners LLC,
at (877) 796-5274.
Common shareholders of Equity Commonwealth and Monmouth will
soon receive an amendment to the joint proxy statement/prospectus
which will contain important information about the amended Merger
Agreement. In addition, Monmouth shareholders will separately
receive an election form to enable them to indicate the form of
consideration they wish to receive for their Monmouth shares.
Monmouth shareholders who do not indicate a preference will be
deemed to have elected to receive EQC common shares. The deadline
for cash or stock elections by Monmouth common shareholders will be
5 p.m., Eastern Time, on September 9, 2021. Regardless of their
election regarding cash or stock consideration, shareholders are
encouraged to submit a WHITE proxy card or voting instruction form
to vote their common shares as promptly as possible.
The transaction is currently expected to close September 9,
2021, subject to customary closing conditions, including approval
by the common shareholders of both Equity Commonwealth and
Monmouth.
Advisors
Goldman Sachs & Co. LLC is acting as financial advisor and
Fried, Frank, Harris, Shriver and Jacobson LLP is serving as legal
advisor to Equity Commonwealth. J.P. Morgan Securities LLC and CS
Capital Advisors, LLC are acting as financial advisors and Stroock
& Stroock & Lavan LLP is serving as legal advisor to
Monmouth.
About Equity
Commonwealth
Equity Commonwealth (NYSE: EQC) is a Chicago based, internally
managed and self-advised real estate investment trust (REIT) with
commercial office properties in the United States. EQC’s portfolio
is comprised of 4 properties totaling 1.5 million square feet.
About Monmouth
Monmouth Real Estate Investment Corporation (NYSE: MNR), founded
in 1968, is one of the oldest public equity REITs in the world.
Monmouth specializes in single tenant, net-leased industrial
properties, subject to long-term leases, primarily to investment
grade tenants. Monmouth is a fully integrated and self-managed real
estate company, whose property portfolio consists of 121
properties, containing a total of approximately 24.7 million
rentable square feet, geographically diversified across 32
states.
Regulation FD
Disclosures
We use any of the following to comply with EQC and MNR
disclosure obligations under Regulation FD: press releases, SEC
filings, public conference calls, or EQC and MNR websites. We
routinely post important information on our websites at
www.eqcre.com and www.mreic.reit,
including information that may be deemed to be material. We
encourage investors and other interested parties to monitor these
distribution channels for material disclosures.
No Offer or Solicitation
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to buy, sell or
solicit any securities or any proxy, vote or approval in any
jurisdiction pursuant to or in connection with the proposed merger
or otherwise, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be deemed to be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information and Where to
Find It
In connection with the proposed merger, EQC has filed a
registration statement on Form S-4 with the SEC, which became
effective on July 23, 2021, to register the common shares of
beneficial interest of EQC to be issued pursuant to the merger with
Monmouth Real Estate Investment Corporation (“MNR”). The
registration statement includes a joint proxy statement/prospectus
which has been filed by EQC and MNR with the SEC and has been sent
to the common shareholders of EQC seeking their approval of the
share issuance and to the common shareholders of MNR seeking their
approval of the merger (the “joint proxy statement/prospectus”).
EQC and MNR intend to file with the SEC and send to their
respective common shareholders an amendment to the joint proxy
statement/prospectus describing the amended terms of the merger.
EQC and MNR may also file other documents regarding the proposed
merger and share issuance with the SEC. Shareholders are urged to
read the joint proxy statement/prospectus and the amendment
thereto, as well as any other amendment or supplement thereto and
any other relevant documents filed with the SEC in connection with
the proposed merger, when they become available, because they will
contain important information about EQC, Monmouth and the proposed
mergers. Investors and security holders will be able to obtain free
copies of the registration statement and joint proxy
statement/prospectus and other documents filed with the SEC, when
they become available, through the website maintained by the SEC at
www.sec.gov. Copies of documents filed with the SEC will also be
available free of charge from EQC and Monmouth using the sources
indicated below.
Participants in the
Solicitation
Equity Commonwealth and Monmouth and certain of their respective
directors and executive officers and other employees may be deemed
to be participants in the solicitation of proxies in connection
with the proposed merger under the rules of the SEC. Investors may
obtain information regarding the names, affiliations and interests
of directors and executive officers of Equity Commonwealth in
Equity Commonwealth’s proxy statement for its 2021 annual meeting
of shareholders, which was filed with the SEC on April 27, 2021, as
well as in its other filings with the SEC. Information about
Monmouth’s directors and executive officers is available in
Monmouth’s Annual Report on Form 10-K for Monmouth’s fiscal year
ended September 30, 2020, filed with the SEC on November 23, 2020,
and in other documents filed by Monmouth with the SEC. Other
information regarding participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, is included in the registration statement on
Form S-4, the solicitation statement / prospectus and other
relevant materials filed or to be filed with the SEC regarding the
proposed merger (if and when they become available). You may obtain
free copies of these documents at the SEC’s website at www.sec.gov.
Copies of documents filed with the SEC will also be available free
of charge from Equity Commonwealth and Monmouth using the sources
indicated below.
Forward-Looking
Statements
Some of the statements contained in this press release
constitute forward-looking statements within the meaning of the
federal securities laws, including, but not limited to, statements
regarding consummating the merger, asset sales and other
transactions described herein and the timing thereof. Any
forward-looking statements contained in this press release are
intended to be made pursuant to the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements relate to expectations, beliefs,
projections, future plans and strategies, anticipated events or
trends and similar expressions concerning matters that are not
historical facts. In some cases, you can identify forward-looking
statements by the use of forward-looking terminology such as “may,”
“will,” “should,” “expects,” “intends,” “plans,” “anticipates,”
“believes,” “estimates,” “predicts,” “potential,” or the negative
of these words and phrases or similar words or phrases which are
predictions of or indicate future events or trends and which do not
relate solely to historical matters. You can also identify
forward-looking statements by discussions of strategy, plans or
intentions.
The forward-looking statements contained in this press release
reflect Equity Commonwealth’s and Monmouth’s current views about
future events and are subject to numerous known and unknown risks,
uncertainties, assumptions and changes in circumstances regarding
Equity Commonwealth and Monmouth that may cause actual results to
differ significantly from those expressed in any forward-looking
statement, including, without limitation, (i) inability to complete
the proposed merger because, among other reasons, one or more
conditions to the closing of the proposed merger may not be
satisfied or waived; (ii) uncertainty as to the timing of
completion of the proposed merger; (iii) potential adverse effects
or changes to relationships with Equity Commonwealth’s or
Monmouth’s respective tenants, employees, service providers or
other parties resulting from the announcement or completion of the
proposed merger; (iv) the outcome of any legal proceedings that may
be instituted against the parties and others related to the merger
agreement; (v) possible disruptions from the proposed merger that
could harm Equity Commonwealth’s or Monmouth’s respective business,
including current plans and operations; (vi) unexpected costs,
charges or expenses resulting from the proposed merger; (vii)
uncertainty of the expected financial performance of Equity
Commonwealth following completion of the proposed merger, including
the possibility that the benefits anticipated from the proposed
merger will not be realized or will not be realized within the
expected time period; (viii) legislative, regulatory and economic
developments; and (ix) unpredictability and severity of
catastrophic events, including, but not limited to, acts of
terrorism, outbreak of war or hostilities and epidemics and
pandemics, including COVID-19, as well as Equity Commonwealth’s or
Monmouth’s management’s response to any of the aforementioned
factors. These factors should not be construed as exhaustive and
should be read in conjunction with other risk factors and
cautionary statements that are included in Equity Commonwealth’s
and Monmouth’s SEC filings. Equity Commonwealth and Monmouth do not
guarantee that the transactions and events described will happen as
described (or that they will happen at all).
While forward-looking statements reflect good faith beliefs,
they are not guarantees of future performance. Equity Commonwealth
and Monmouth disclaim any obligation to publicly update or revise
any forward-looking statement to reflect changes in underlying
assumptions or factors, of new information, data or methods, future
events or other changes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210816005225/en/
Equity Commonwealth - Investors & Media Sarah Byrnes
(312) 646-2801 ir@eqcre.com
Monmouth - Investors Becky Coleridge (732) 577-9996
mreic@mreic.com
Monmouth - Media Andrew Siegel / Kara Brickman Joele
Frank (212) 355-4449
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