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PFI share price leads index up on $800M merger

Monday 15th April 2013

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Property for Industry led the NZX50 up before lunchtime today as it announced a deal to merge with Direct Property Fund, an unlisted PIE in the same sector, to create a commercial property empire worth close to $800 million.

PFI shares were up 4.9 percent at 11am, at $1.40, and were showing a 14.1 percent gain over the last 12 months.

PFI's most recent annual report values its 50 industrial property assets at $382.2 million, while DPF's latest half-year report says its portfolio is valued at $410 million.

Established in 2003, DPF is an unlisted portfolio investment entity, whose shares are tradable on the Computershare platform, Sharemart.

PFI was founded in 2004 to provide listed company exposure to the industrial property market. Both companies have had dividend payout policies set at 100 percent of earnings.

In a statement to the NZX, PFI chair Peter Masfen said DPF shareholders will receive 123.22 PFI shares for each DPF share, valuing each DPF share at $172.51, on this morning's share price. The merger ratio took in a wide range of factors including historic earnings multiples, portfolio characteristics, the cost to PFI of raising capital to buy DPF's assets, and the costs of DPF listing independently.

"This is a transformational transaction for both PFI and DPF shareholders," Masfen said. Both companies already share one director, Greg Reidy.

Deloitte will now prepare an independent experts' report for both boards to confirm the decision to merge, while PFI has appointed another accounting firm, PwC, to prepare an independent appraisal for shareholders.

The merger is timed for July 1, and will require shareholder meetings and approvals, for which documentation will be distributed for votes in late June.

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