Capco is purchasing 64.4 million shares from Shaftesbury for £436 million, representing a 20.9% interest.
The property manager says the deal with Veloqx for £5.4 per share will close on June 2.
The UK company may expand its investment at a later date by an additional 16.3 million shares.
In an announcement on Monday, Capital & Countries Properties (LON: CAPC) said it had entered into an agreement to purchase Samuel Tak Lee’s stake in Shaftesbury (LON: SHB) for £436 million. The Hong Kong tycoon had a 26.3% stake in Capco’s central London rivals.
Capital & Countries Properties posted a 1.7% increase, while Shaftesbury saw a 2.7% decline in Monday’s pre-trade trading. At 168 pence per share, Capco’s share price has so far been around 35% lower than the previous year’s level. The UK property investment and development company recently sold its Earls Court property for £425 million.
Capco sealed the deal with Veloqx for £5.4 per share.
Tak Lee set up a trust fund in Singapore in 2005 called Veloqx, which held and managed his stake in Shaftesbury. Capco revealed on Monday that the deal was sealed with Veloqx for £5.4 per share, a discount of 13.9% to the closing price of Shaftesbury on Friday.
The deal is the first in the UK following the coronavirus pandemic that brought the property sector almost to a standstill when retailers and a number of other companies postponed rent payments in the midst of the health crisis in order to get their finances back on track. The pandemic also fuelled uncertainty in the sector, making it difficult to value buildings and portfolios in general.
To date, the flu-like virus has infected more than a quarter of a million people in the UK and has claimed over 38,000 lives.
According to Capco, the transaction will be completed on June 2.
Covent Garden’s owner, Capco, said it will invest £436 million in Shaftesbury to acquire 64.4 million shares of the company. Following the closing of the transaction on June 2, Capco will hold a 20.9% stake in the UK Real Schätzungs-Investment Trust (REIT). Learn more about how to invest in REITs
The UK property manager also announced plans to expand its investment in Shaftesbury at a later date with an additional 16.3 million shares for £88 million (in cash).
Rothschild & Co acted as sponsor and lead financial advisor to the agreement with Capco.
In a separate announcement on Monday, Shaftesbury also announced that the Hong Kong tycoon has suspended all litigation over allegations relating to the Company’s share placement, which was completed in 2017.
Capco’s performance in the stock market was viewed quite optimistically in 2019 with an annual profit of just under 15%. At the time of writing this report, the UK property manager has a market capitalisation of £1.43 billion. Shaftesbury, on the other hand, is currently valued at £1.92 billion.