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%.
