Sime Darby to acquire Saizen Reit, inject Australian industrial properties in reverse takeover

MALAYSIAN conglomerate Sime Darby will acquire a majority stake in Saizen Real Estate Investment Trust (Reit) through a reverse takeover and inject Australian industrial property into the trust, the Reit manager announced on Monday.

Only a framework agreement has been reached; parties are negotiating on the final terms and will conduct due diligence.

Singapore-incorporated Sime Darby Property Singapore will hold 80 per cent of the Reit manager as a result of the planned transaction. The Australian assets will be acquired from the Sime Darby Group's subsidiary Hastings Deering (Australia).

Saizen Reit's manager estimates that the market capitalisation of Saizen Reit should be at least S$300 million following the Sime Darby deal.

Saizen Reit is currently a cash trust after its portfolio of Japanese properties were sold in March. Most of the proceeds from the disposal were paid out to unitholders in a S$1.056 per unit special distribution, and the total cash at liquidation as at July 15 stood at 9.87 Singapore cents per unit.

Existing unitholders are expected to receive that liquidation distribution before the new shares are issued to Sime Darby. After the liquidation distribution, part of the consideration for the Australian properties will be fulfilled by issuing new Saizen Reit units at 3.484 Singapore cents apiece.

Additional consideration amounts will be fulfilled by payment of cash proceeds from external bank financing, which Sime Darby will arrange.

The framework agreement carries a long-stop date of Sept 30, 2016, after which Sime Darby will reimburse Saizen Reit for transaction expenses if no deal has been reached.

Sime Darby will probably own more than 30 per cent of the Reit after the deal, and the group plans to seek a whitewash waiver to avoid having to make a general offer for the Reit.