Activist Investor Against Mapletree Commercial Trust Merger
SINGAPORE – The proposed S$4.2 billion ($3.1 billion) merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) is being opposed by activist investor Quarz Capital Management, which deems the consideration as highly discounted, reported Reuters on Thursday evening (10 February, SGT).
Quarz is among the top 10 unitholders of MNACT. It is overseen by its Chief Investment Officer Jan Moermann, who is a former Swiss banker. He and Havard Chi, Quarz’s Singapore-based Research Head, stated in a letter that while they support the rationale of the merger, they are against the merger ratio and price.
Notably, MCT is offering to buy all the units of MNACT in exchange for MCT units, or a mix of both cash and MCT units that values MNACT’s share at S$1.1949 apiece.
They insisted in the letter that the offer price translates to one of the “highest discounts to net asset value (NAV) in the 20-year history of the Singapore REIT market with multiple takeovers and mergers.”
“We agree that the offer is value destructive to unitholders and significantly undervalues MNACT,” noted Moermann and Chi, adding that they are confident MNACT would see a strong recovery from H2 2022 amidst increasing global COVID-19 vaccination rates.
Thus, the activist investor is calling on MNACT to negotiate a better offer from MCT. “MNACT’s board and management should initiate a transparent and robust process to sell the assets above NAV of S$1.23 instead of recommending the suboptimal offer of S$1.08-S$1.10 from MCT,” Quarz explained.
On the other hand, the managers of MCT and MNACT think that the offer is in accordance with MNACT’s NAV per unit, as it represented a 7.6 percent premium to MNACT’s closing price of S$1.11 on 27 December 2021 and it was also based on MCT’s unit price of S$2.
MNACT’s primary portfolio includes 1 commercial property in Hong Kong and 2 in China, while MCT is a real estate investment trust (REIT) focusing on Singapore assets.