Merlin & Testa: Birth Of A Giant With Assets Worth €5,500M

10 June 2015 – Expansión

For background to this story, refer to the article published yesterday: Sacyr Sells Its Subsidiary Testa To Merlin For €1,793M

The union of Testa and Merlin will create a giant, with assets worth almost €5,500 million; gross annual income of €290 million; and a market capitalisation that currently stands at €4,400 million.

Specifically, Merlin, the company led by Ismael Clemente and controlled by UBS, Marketfield and Gruss Capital, has a market capitalisation of €2,275 million and a real estate portfolio of €2,594 million, which covers a surface area of 680,000 m2 and generates annual income of €132 million.

Meanwhile, Testa is one of the leading real estate companies in Spain. It has a portfolio of real estate assets for rent, mainly in Madrid and Barcelona, which have a combined leasable surface area of 1,043,000 m2 and a value of €3,180 million. Its assets include one of the four skyscrapers at the northern end of the Paseo de la Castellana in Madrid, the Torre Sacyr (pictured above).

Merlin consolidates its position as the largest Socimi in Spain

Merlin Properties, which acknowledged its intention to invest in Testa’s share capital in April, has consolidated its position as the largest Socimi (listed real estate asset investment company) in Spain.


Phased sale until June 2016

The sale will be carried out in several phases and through an “accordion operation” over the next few months. The first phase was completed yesterday with a capital increase through which Merlin took a 25% stake in Testa’s share capital.

To this end, Testa undertook a €669.7 million capital decrease and distributed an extraordinary dividend of €527.7 million, through which Sacyr generated revenues of €238 million.

Thus, €1,793 million is the amount that results from adding the aforementioned €238 million to the €1,555 million that will correspond to the sale of the remaining 74.6% stake in Testa, which Sacyr owns following the capital increase. This operation will be executed “in successive tranches and phases, which will be completed before 30 June 2016”, according to reports by the company to Spain’s National Securities Market Commission (CNMV).

Once this acquisition has been completed, Merlin plans to make a public tender offer (OPA) for 100% of Testa’s shares. However, Sacyr has agreed to “irrevocably immobilise its shares in Testa and not participate in the process”.

Lazard has advised Sacyr in the deal and Morgan Stanley and Goldman Sachs have acted as financial advisors to Merlin.

Sacyr and Merlin’s share prices increase; Testa’s decreases

Sacyr, which is one of the best-performing securities on the Ibex so far this year, has received a boost from this operation – its shares were up by 4.3% yesterday, to €3.756 per share, leading the increases on the market. Investors also applauded the behaviour of Merlin Properties, whose shares increased by 1.58% to €11.54 per share.

Meanwhile, Testa returned to the stock market with a negative tone. By the end of the session, it had recorded a loss of almost 3%, to €13.15 per share, after the CNMV suspended trading of its shares between 12:00 and 15:00.

Original story: Expansión (by M.L.)

Translation: Carmel Drake