Blackstone agrees to buy UK-based St Modwen Properties for £1.2 billion

London

BLACKSTONE Group Inc has agreed to buy St Modwen Properties Plc in a bid that values the British developer at about £1.2 billion (S$2.26 billion).

The purchase will give the private equity giant a bigger slice of the UK's warehouse market. Blackstone is offering 542 pence per share in cash, according to a statement on Thursday. Blackstone announced the bid earlier this month and St Modwen had indicated it would accept the offer.

Competition for warehouses across Europe has intensified as global investors including Goldman Sachs Group Inc, Cerberus Capital Management LP and GIC Pte bet on rising rental income after the pandemic prompted more people to shift their shopping online.

With UK warehouse lease agreements reaching a record in the first quarter, according to CBRE Group Inc, the asset class is outperforming any other type of commercial property.

Blackstone has been racing to scale up its Mileway unit that focuses on urban warehouse properties close to population centres that are in demand from online retailers seeking to cut delivery times. Recent UK deals include the purchase of a £473 million portfolio from Prologis Inc in October and a £118.5 million deal for the Bedfont Logistics Park in March.

St Modwen has three main business units, focusing on housebuilding, warehouses and urban regeneration.

After shifting its focus toward logistics in the past two years, that unit now accounts for about 49 per cent of the company's £1.37 billion portfolio, according to a February earnings statement.

The rest is split almost equally between its house building arm and the strategic land and regeneration unit which the company has been shrinking.

The offer represents a premium of 21.1 per cent over St Modwen's price the day before the Blackstone offer was announced. One of the developer's biggest investors said the proposal was too low. J O Hambro Capital Management Ltd, which owns just over 9 per cent of St Modwen, said at the time it would resist the offer. BLOOMBERG