Private equity giant Blackstone has made a move to ramp up its exposure to the booming UK logistics real estate market, with a £1.2 billion approach for St Modwen Properties.
Shares in FTSE 250 property developer St Modwen surged 83.5p, or more than 18%, to 531p after it said it had received a possible cash offer of 542p per share.
The possible offer represents a 21% premium to the firm’s closing share price yesterday.
St Modwen’s bumper logistics property business is likely to be what has attracted Blackstone: the takeover target has a pipeline of 19 million square feet of warehouse space it could build.
If a deal is agreed it would see investment group Blackstone also take over a company that has a regional housebuilding arm where the average selling price is around £280,000, and a land and regeneration division specialising in large residential projects on brownfield sites.
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Warehousing landlords have seen high demand for space in recent years, as retailers and other businesses try and cope with growing online order levels. That demand accelerate during the pandemic.
Blackstone has been expanding Mileway, its European last-mile logistics real estate firm, and today the warehousing division has over 600 properties in the UK.
St Modwen, which has been led by Sarwjit Sambhi since November 2020, said its board “has indicated to Blackstone that the possible offer is at a value the board would be willing to recommend unanimously”, should a firm intention to make an offer be announced.
The companies said they are working closely together to complete Blackstone’s confirmatory due diligence as soon as practicable.
A note from analysts at Peel Hunt said: “We are not surprised that Blackstone sees value here; we wonder if the plan might be to consolidate Industrial & Logistics and spin off housebuilding. Blackstone is showing confidence in the UK.”
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