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St Modwen shares surge 20% as Blackstone makes £1.2bn bid

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·Contributor
·3 min read
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UKRAINE - 2019/03/21: In this photo illustration a St. Modwen Properties Plc logo seen displayed on a smart phone. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
Birmingham-based St Modwen, which develops and manages industrial properties, climbed as much as 20% to the top of the FTSE 250 on the back of the proposal. Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Shares in real estate company St Modwen (SMP.L) steamed ahead on Friday after investment firm Blackstone Group made a £1.21bn ($1.68bn) acquisition bid. 

Birmingham-based St Modwen, which develops and manages industrial properties, climbed as much as 20% to the top of the FTSE 250 on the back of the proposal.

The offer of 542p a share represented a 21% premium to the company’s closing price of 448p on Thursday.

In a statement, St. Modwen said that its board would likely recommend the non-binding conditional offer unanimously, should a firm intention be announced by 4 June.

Shares rocketed around 20% on Friday on the back of the news. Chart: Yahoo Finance
Shares rocketed around 20% on Friday on the back of the news. Chart: Yahoo Finance

Centre Parcs owner Blackstone is currently performing due diligence as the possible offer is subject to certain pre-conditions, the company said.

St Modwen, which built 948 homes last year and is aiming for 1,500 per year by 2023, also builds industrial and logistics spaces such as warehouses. It counts Amazon UK (AMZN), DHL (DPW.DE) and Ocado (OCDO.L) as some of its clients.

Warehouse space has been in growing demand since the COVID-19 crisis triggered a surge in online shopping.

Due to this, competition for warehouse properties across Europe has intensified and global investors, including Goldman Sachs (GS) and Cerberus Capital Management are betting on rising rents fuelled by demand from e-commerce.

St Modwen made a loss of £120.8m last year, hit by site closures during national lockdowns across the UK, despite recording profits in the second half.

It has a 19 million square feet pipeline of logistics projects and has confirmed that it wants to sell £200m of its assets by 2023.

Read more: Demand for warehouses skyrockets as retailers adapt to online sales amid COVID-19

Blackstone, which joined forces with former Gatwick owner GIP and Bill Gates’ investment vehicle to buy private jet services firm Signature Aviation in February, is currently in a takeover battle for Australia’s Crown Resorts.

Blackstone bought NEC Group, which includes the National Exhibition Centre in Birmingham, in 2018.

It also includes the International Convention Centre, Resorts World Arena and Utilita Arena among its assets as well as caterer Amadeus and national ticketing agency The Ticket Factory.

Russ Mould, investment director at AJ Bell, said that the move is part of a “growing list of takeover offers for UK-listed companies, to suggest there is still value to be had, even as the FTSE 100 tries to pull away from the 7,000 mark.”

“St Modwen’s focus on logistics sites and housebuilding, with a strong pipeline of developments, also means its business profile fits the bill for private equity. In addition, the company’s NAV per share figure at the last count was 428p and the shares have consistently traded at a discount to that figure over the past year.”

Watch: What are SPACs?