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Merlin Completes Purchase Of Remaining 23% Stake In Testa

9 June 2016 – Cinco Días

Merlin Properties now owns 99.9% of Testa. Within the next few days, once the finishing touches have been completed, the Socimi will pay €317 million for the 22.7% stake in Testa that Sacyr still owns. This final transaction, which forms part of the acquisition agreement governing the construction company’s real estate subsidiary, has been moved forward by several weeks, ahead of the original deadline of 30 June.

A year ago, the Socimi chaired by Ismael Clemente, announced the acquisition of Sacyr’s subsidiary for €1,793 million, and established a timetable of partial purchases spanning one year. This arrangement was reached mainly because Testa’s shares were being used as collateral to secure a loan that Sacyr had taken out to buy 20% of Repsol in 2006.

Sacyr is in the process of obtaining the necessary consent from its financing banks and has already obtained approval from 80% of them, according to reports from financial sources. On the other side, Merlin has reserved the amount in cash, pending the conclusion of this final part of the acquisition.

Merlin will obtain an ownership stake of 99.9% (the rest belongs to individuals) and will launch the merger of the two companies immediately. From an operational point of view, the integration between the two companies’ teams has been a reality now for several months; as such, this operation simply represents the completion of the acquisition process and will not result in any changes to the companies’ operations.

During the first phase of the acquisition, completed in June last year, Merlin acquired 25% of Testa’s share capital by subscribing to its €431 million capital increase. On 23 July 2015, Merlin paid €861 million for another 25.1% stake. And then, a few days later, in August, it bought an additional 26.91% stake in the real estate company. The Socimi will pay €317 million in this final transaction, according to information provided to analysts in previous presentations.

Merlin, which is listed on the Ibex 35 and focuses on the rental of properties, generated a net profit of €49.1 million in 2015, the first full year of operation for this young real estate investment company. The company recorded revenues of €214 million from the rental of its real estate portfolio, an amount that almost quadrupled the figure it had recorded in 2014, thanks to the inclusion of the assets owned by the real estate company acquired from Sacyr.

The Socimi’s real estate portfolio was valued at €6,053 million at the end of 2015, according to a report from an independent appraisal company, issued following the purchase of Testa.

In addition, last December, Merlin completed an operation with 10 banks to refinance the €1,700 million debt that it had inherited from Testa. Moreover, in April, it launched a bond issue amounting to €850 million to restructure its liabilities.

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake