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Press releaseStockholm /Oslo ,24 November 2020
SBB announces intention to launch a voluntary tender offer to acquireEntra to create the leading European social infrastructure player
Samhällsbyggnadsbolaget iNorden AB ("SBB") announces its intention to launch a voluntary tender offer (the "Offer") to acquire all the outstanding shares inEntra ASA ("Entra "). TheEntra shares are traded on the Oslo Exchange under ticker "ENTRA ". For more information onEntra , see www.entra.no.
Under the terms of the Offer,Entra shareholders will be offeredNOK 165 perEntra share, delivered as a combination ofNOK 115.5 in cash (the "Cash Consideration") andNOK 49.5 (the "Share Consideration") in new SBB ClassB Shares , representing a premium of 26.3% compared toEntra's three months volume-weighted average share price on 23November 20201 , and a premium of 14.8% compared toEntra's closing share price on23 November 2020 . The terms of the Offer imply a total equity value forEntra ofNOK 30,052 million2. In aggregate, up to a total ofNOK 21.0 billion will be paid as Cash Consideration and the issuance of a number of SBB ClassB Shares representing up to a total ofNOK 9.0 billion will be settled as Share Consideration3. The SBB ClassB Shares are traded on Nasdaq Stockholm, Large Cap.
The proposed business combination has strong industrial logic and represents a unique value proposition for bothEntra and SBB shareholders and stakeholders, who will benefit from:
* The creation of the leading European social infrastructure player with significantly enhanced scale and visibility, with a total pro forma Gross Asset Value ofSEK 131 billion as of 30September 20204 ;
* A uniquely positioned portfolio of social infrastructure properties, with a well-diversified tenant base, virtually perpetual leases and almost full occupancy underpinned by the strong sovereign credit ratings of the Nordic countries;
*A value creating transaction, which SBB expects to be accretive to its Funds From Operations per share in the first year following completion, with identified aggregate pre-tax run-rate synergies of approximatelySEK 260 million per annum;
*A robust balance sheet, with improved credit metrics; well positioned to reach the target of BBB+ during 2021;
*An enlarged capital markets profile, with the combined company becoming the leading listed real estate company inNorthern Europe , with increased liquidity, visibility and access to capital; and
A strong commitment to become the most sustainable real estate company in the world by 2030.
Commenting on the transaction, CEO of SBB,Ilija Batljan , said: "We would likeEntra to become part of SBB and join us in our ambition to create the leading social infrastructure company inEurope , a company with a unique, attractive and stable property portfolio with long leases, high occupancy rates and a diversified and high-quality tenant base across the Nordics. We see opportunities to unlock significant synergy potential particularly from refinancing benefits accelerating financial cost and operational savings, which will benefit all shareholders and other stakeholders", and he continues: "Our philosophy is that tenants should not have to tie up capital in the form of buildings. They should instead be able to prioritise investing in people, services and solutions to the benefit of society. Our role is to attract the capital on competitive terms from domestic and international investors."
SBB respects the accomplishments of the board and management team ofEntra and, accordingly, it is SBB's desire and intention to work collaboratively withEntra in order to agree on a friendly transaction. To that end, SBB has recently shared the terms of the Offer with the board ofEntra , which is a meaningful improvement to a previous offer which was shared in private with the board ofEntra . While SBB respectfully awaits a recommendation fromEntra's board of directors, SBB has chosen to publish its intention to launch an offer with the aim to provideEntra's shareholders with an opportunity to accept the Offer prior to year-end.
Key Offer Terms and Structure
Under the Offer terms,Entra shareholders will be offeredNOK 165 perEntra share, which will be delivered as a combination ofNOK 115.5 in cash andNOK 49.5 in new SBB ClassB Shares .
Based on the SBB 5-day volume weighted average price to and including 23November 20205 , approximately 296 million SBB B Class shares will be issued toEntra shareholders to fund the Share Consideration and a total ofNOK 21.0 billion will be paid as the Cash Consideration, resulting in a 30% Share Consideration and 70% Cash Consideration mix. Following completion of the proposed transaction, assuming 100% acceptance of the Offer, existing SBB shareholders will hold c.83.5% of the combined company's total shares6 andEntra shareholders will hold c.16.5%. Further, Entra Shareholders will be offered the ability to increase their allocation of cash or shares, subject to elections by the rest of the shareholder base, under the Mix & Match facility.
The Offer Price ofNOK 165 per share represents a premium of approximately:
* 26.3% compared to the volume-weighted average share price of Entra Shares on theOslo Stock Exchange during the three months to 23November 20207 ; and
* 14.8% to the closing price of theEntra shares on theOslo Stock Exchange on 23November 20208 .
The Offer Price also providesEntra shareholders with an opportunity to realise the value of their holdings inEntra at effectively the all-time high share price since the IPO of the company ofNOK 165.20 , which was on 20February 20209 .
In addition to delivering an attractive premium relative to various share price benchmarks, the Offer Price also delivers full value relative toEntra's asset value. Specifically, the Offer Price represents a premium of 3.1% to the EPRA Net Asset Value ofEntra based on the unaudited interim report as at 30September 202010 .
The Offer also providesEntra shareholders with the opportunity to participate in the strategic and financial benefits of the combination through the Share Consideration.
Background and Transaction Rationale
SBB has a demonstrated track-record of long-term value enhancement of its portfolio. Its strategy is focused on stable, low-risk assets with high-quality tenants community service properties in the Nordics and Swedish rent-regulated residential properties. One of the fundamental aspects of SBB's business is its strong relationships with Nordic municipalities and it takes its responsibilities to the community very seriously through its commitment to own and develop social infrastructure assets.
Responsible ownership and the goal of meeting general societal objectives are an integral part of SBB's core philosophy and SBB believes that in this regard SBB is the right partner forEntra and, most importantly, that the combined company will have an exciting future together by playing an important role for government financed tenants in the region and more broadly by being the community service provider of choice in the Nordics.
SBB has followedEntra closely over the past several years and has been impressed by its high quality assets, its strong relationship with governmental and municipal tenants, and its industry leading commitment to sustainability. A combination withEntra has strong strategic rationale as it provides an opportunity to further scale SBB's business inNorway whilst its portfolio has strong similarities with SBB's portfolio, enabling SBB to continue its growth ambitions of becoming the leading social infrastructure company inEurope . On the basis of the strong strategic rationale for the combination, coupled with the significant synergy potential, SBB believes that the Offer is highly attractive to the stakeholders ofEntra , including toEntra's shareholders who are offered continued participation through the share element of the Offer.
SBB believes the combined company, with a substantially larger portfolio of approximatelySEK 131 billion in Gross Asset Value as of 30September 202011 and greater geographical footprint, would be even better positioned as a long-term committed partner to government tenants and local municipalities, amongst others, across the Nordic. By expanding into government infrastructure assets inNorway , the management of SBB believes that the combined company will offer an attractive property portfolio with highly stable and predictable cash flows, underpinned by the strong sovereign credit ratings of the Nordic countries. The combined property portfolio will be characterised by long-term lease terms, high occupancy rates and a diversified tenant base, with a high concentration of government supported occupants. Furthermore, SBB believes that the combination will fit well with its long-term sustainability efforts and will enable the combined company to converge their ESG goals with common focus on sustainability leadership in the years to come.
SBB has identified a total of c.SEK 260 million of expected run-rate synergies pre taxation, reflecting a unique opportunity to create value for both sets of shareholders. ApproximatelySEK 60 million of annual synergies are anticipated to be driven by corporate efficiencies, optimisation of operations and active asset management. An additional c.SEK 200 million of annual financing synergies are expected to be generated through optimisation of the combined entity's capital structure, supported by SBB's attractive cost of funding. These operating and financing synergies are expected to be realised within the first 12 months post completion of the transaction.
Offer Timeline and Conditionality
The Offer features an accelerated transaction timeline and limited conditions to closing. SBB is in the process of finalising a combined offer document and an "Exempted Document" pursuant to and in accordance with Article 1 (4) (f) of Regulation (EU) 2017/1129 (the "EU Prospectus Regulation"), and the Offer will be launched following regulatory approval of the offer document, expected to take place shortly. The aim is to announce the final result of the Offer prior to Christmas.
Completion of the Offer is subject to customary conditions including, but not limited to, 90% minimum acceptance of the Offer, satisfactory due diligence, and clearance from theNorwegian Competition Authority . The resolution to issue the SBB ClassB Shares for the Share Consideration will be resolved by SBB's board of directors based on an authorisation granted by the annual general meeting held on27 April 2020 and is, as such, not subject to any approval by the general meeting. The Cash Consideration in the Offer will be fully financed through a combination of cash on balance sheet, available credit lines and debt financing provided on a certain funds basis, and, as such, there are no financing conditions to the Offer. Settlement is expected to take place as soon as SBB has announced that the conditions for the Offer have been fulfilled or that SBB has decided to complete the Offer by waiving any unfulfilled conditions. The complete terms and conditions for the Offer, including procedures for how to accept the Offer and detailed information regarding settlement, are set out in the Offer Document.
AdvisersArctic Securities ,Citigroup Global Markets Europe AG and Goldman Sachs International are acting as financial advisors to SBB.Arctic Securities is also acting as settlement agent for the Offer.Advokatfirmaet Thommessen AS is acting as Norwegian legal counsel to SBB and Advokatfirman Vinge KB is acting as Swedish legal counsel to SBB.Advokatfirmaet Wiersholm AS is acting as Norwegian legal counsel to the Receiving Agent.
For further information, please contact:
Marika Dimming, Investor Relations at SBB
Phone: +46 702 51 66 89
E-mail: ir@sbbnorden.se This is information that Samhällsbyggnadsbolaget iNorden AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation.
The information was sent for publication, through the agency of the contact person set out above, on24 November 2020 , at11:40 a.m. (CET) .
Invitation to a conference call and webcast by SBB in connection with the intention to launch a voluntary tender offer to the shareholders ofEntra ASA
SBB invites investors, analysts and media to a conference call and webcast on24 November 2020 at12:15 a.m. (CET) . The presentation will be held by CEOIlija Batljan in English and will conclude with a Q&A session. Questions can be asked on the telephone conference or in written form through the webcast. No pre-registration is needed.
Webcast link: https://tv.streamfabriken.com/2020-11-24-pressconference
To participate via telephone, please dial-in on the numbers below.Sweden +46 8 566 42 651Norway : +47 23 500 243United Kingdom : +44 3333 000 804United States +1 855 85 70 686
Code 11045225#
After the presentation, a recording of the webcast will be available on the webcast link.
About SBB:
SBB was established inMarch 2016 , and is the leading Nordic social infrastructure property company. It has a portfolio acrossSweden ,Norway ,Finland andDenmark with a gross asset value ofSEK 81 billion as of30 September 2020 . SBB generates most of its income from the management of its social infrastructure property portfolio, which includes (i) community services properties, such as elderly care homes, schools and group housing, inSweden ,Norway ,Finland andDenmark and (ii) rent- regulated residential properties inSweden . SBB also generates additional income streams from property renovations, property development activities and real estate transactions. SBB's business model is to acquire and manage properties and deploy permanent capital to effectively generate sustainable and steady risk-adjusted returns. As of30 September 2020 , community services properties and rent-regulated residential properties accounted for approximately 78% and 16% of theSBB Group's total portfolio by gross asset value, respectively. SBB has built its business based on strong and difficult to replicate relationships with municipalities. SBB takes its responsibilities to the community very seriously by also developing building rights for social infrastructure. SBB's series B shares (ticker SBB B) and D shares (ticker SBB D) are listed on Nasdaq Stockholm, Large Cap. SBB's preference shares (ticker SBB PREF) are listed on Nasdaq First North Premier Growth Market. Certified Adviser isErik Penser Bank (contact: certifiedadviser@penser.se / +46 84638300). Please see www.sbbnorden.se for further information about SBB.
Footnotes
1) Referencing Entra's volume-weighted average share price for the three months to and including23 November 2020 ofNOK 130.66 (source: Bloomberg).
2) On the basis of 182,132,055Entra shares outstanding.
3) Provided that SBB does not use its right to, in whole or in part, settle the share consideration in cash.
4) Applying NOKSEK exchange rate of 0.96.
5) SEK 29.1262 (source: Bloomberg).
6) Based on total outstanding shares for SBB of 1,501,534,791 (pro forma for 44,533,762 Class B shares to be issued in respect of the Svea Fastigheter transaction, and including class A, B, D and preference shares).
7) Using Entra's volume-weighted average share price for the three months to and including23 November 2020 ofNOK 130.66 (source: Bloomberg).
8) Using Entra's closing share price ofNOK 143.70 as of23 November 2020 (source: Bloomberg).
9) All time high based on daily closing prices.
10) Entra EPRA NAV ofNOK 160 as of30 September 2020 .
11) Applying NOKSEK exchange rate of 0.96.
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