Viva and ESR to merge?

E-Shang Redwood Reit has announced today that it is offering a merger with Viva Industrial Trust via a stock buyout. The day ended with Viva gaining 15c off its share price and ESR ending trading at a muted level.

As I am vested in ESR Reit this news is of interest to me. As of now details are hazy but I would like to think that the merger would benefit the holders of ESR more than those of Viva as the latter is trading at a relatively higher yield. That being said, it remains to be seen how many shares would be required to satisfy the shareholders of Viva to come on board.

As this is a stock buyout, I don’t think the unit holders of Viva will be compensated through monetary terms and thus it is interesting to see how the deal is going to be structured. ESR cannot afford to woo Viva’s shareholders at the cost of its own and thus have to strike a balance between the two.

Overall, While Viva has done well without ESR thus far, unit holders of both entities are likely to benefit from the larger AUM as financing cost will be brought to a more manageable level. ESR also has a stronger foreign pipeline of projects which bodes well should the combined entity diversify away from Singapore.

Waiting to learn and understand more!

Do read more here

  1. ESR Reit announcement here and presentation here
  2. Viva Industrial trust announcement here

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