Charter Hall (ASX:CLW) leads $1.68b takeover deal of ALE Property (ASX:LEP)

• In a $1.68 billion deal, Charter Hall Long WALE REIT and a Charter Hall managed trust on behalf of Hostplus has entered an agreement to buy ALE Property
• Under the transaction terms, LEP security holders will receive $5.683 per LEP security comprising $3.673 cash and 0.408 CLW securities per LEP security
• The proposal has an implied value of $5.88 per ALE security, which reflects a 25.2 per cent premium to the closing price of ALE securities of $4.70
• LEP shares have skyrocketed 20.9 per cent to $5.68 on the back of the news, while shares in CLW have slumped 3.60 per cent to $5.09 at 1:13 pm AEST

In a $1.68 billion deal, Charter Hall Long WALE REIT (CLW) and a Charter Hall managed trust, on behalf of Hostplus, has entered a deal to acquire ALE Property (LEP).

CLW is undertaking the transaction alongside Hostplus, its existing capital partner, in which both parties will own 50 per cent of ALE’s assets via schemes of arrangement.

ALE shares have skyrocketed 20.9 per cent on the back of the news, while shares in CLW slumped 3.60 per cent.

CLW fund manager Avi Anger said the deal would deliver significant benefits to both LEP and CLW shareholders.

“The transaction is consistent with CLW’s strategy to invest in high quality real estate assets that are predominantly leased to corporate and government tenants on long term leases,” he said.

“We are pleased to be able to continue our partnership with Hostplus, a leading Australian Superannuation Fund, in investing in high quality pubs and liquor retail outlets leased to Endeavour Group.”

The LEP Board has unanimously recommended that securityholders vote in favour of the transaction, in the absence of a better proposal and subject to an independent expert, Duff & Phelps, determining that the transaction is in the best interest of securityholders.

Under the transaction terms, LEP securityholders will receive $5.683 per LEP security comprising $3.673 cash and 0.408 CLW securities per LEP security.

ALE security holders will also receive the September quarter distribution announced today of 5.5 cents per security.

Based on the closing price of CLW securities on Friday, 17 September, of $5.28 the proposal has an implied value of $5.88 per ALE security, which reflects a 25.2 per cent premium to the closing price of ALE securities of $4.70.

ALE chairman Robert Mactier said the proposal was highly attractive for ALE securityholders, as it reflected a material premium to ALE’s trading price and the revised independent valuation of ALE’s portfolio.

The ALE board said it had received an unsolicited proposal from CLW in July, and in recommending the deal said the proposal would help to accelerate ALE’s growth.

CLW said the transaction provided the opportunity to acquire a large scale,
materially under-rented portfolio of high-quality hospitality assets.

After the transaction, CLW will continue to be Australia’s biggest and most diverse long WALE REIT, with a pro forma market capitalisation of about $3.8 billion.

The CLW portfolio will include 550 properties worth $6.5 billion with a weighted average lease expiry of 12.6 years and a 98.4 per cent occupancy rate.

LEP shares skyrocketed 20.9 per cent to $5.68 on the back of the news, while shares in CLW slumped 3.60 per cent to $5.09 at 1:13 pm AEST.