Frasers Logistics and Industrial Trust and Frasers Commercial Trust Announce Proposed Merger

Investors have already felt something fishy last Friday when both Frasers Commercial Trust and Frasers Logistics and Industrial Trust requested for a trading halt. Today, Frasers Logistics and Industrial Trust and Frasers Commercial Trust announced a proposed merger by way of trust scheme.

In conjuction with the merger, Frasers Logistics and Industrial Trust also proposed the acquisition of 50% interest in Farnborough Business Park from a wholly-owned subsidiary of Frasers Property Limited. The remaining 50% is currently held by Frasers Commercial Trust (Read more: My Personal Analysis Of Frasers Commercial Trust) After the merger, Frasers Logistics and Industrial Trust will hold 100% of Farnborough Business Park.

With the merger, the total assets will be worth approximately S$5.7 billion and the enlarged REIT will be one of the top 10 S-REIT by market capitalisation with index representation.

Frasers Commercial Trust unitholders will receive

  • S$0.151 in cash for each unit; and 
  • 1.233 new Frasers Logistics and Industrial Trust units at an issue price of S$1.240 per unit.

I shall not dive into other rationale that the manager gave for the proposed merger. As a dividend investor, I am only keen in the dividend yield after the merger. The merger is expected to be DPU accretive on a pro forma basis for both Frasers Logistics and Industrial Trust unitholders and Frasers Commercial Trust unitholders by 2.2% and 4.2% respectively.

After the news of the merger broke out, share price of Frasers Commercial Trust has also gone up by 2.40%.