Based on closing prices on Oct. 3, the transaction is valued at about $1 billion, DDR says in a prepared statement.
DDR will pay $439 million in shares of common and preferred stock and assume about $584 million in debt. In exchange, it will acquire the 81 properties that are owned and operated by JDN, 21 properties that are under construction by JDN, and a pipeline of 17 additional properties to be developed for $220 million.
During an Oct. 7 conference call, Craig Macnab, acting chief executive officer of JDN, said his company, working with advisor, New York-based Lazard Freres, had evaluated 40 potential acquirers over the past two years. The choice, he said, was based on DDR's advantages of JDN stockholders. He said DDR's share price had doubled in the 10 years since it went public.
Because 25% of JDN's assets are invested in development and land, he said, DDR's understanding of development would also accrue to shareholders. He said DDR's "excellent credit rating" would allow it to reduce interest expenses on the debt through lower borrowing costs.
During the conference call, Scott Wolstein, DDR's chairman and chief executive officer, said he anticipates 2003 savings of $$9 million by eliminating redundancies in executive and corporate positions and $6 million in interest expense.
Directors of both companies have approved the proposed merger. However, it remains subject to the approval of JDN shareholders, to DDR shareholders' approval of the issuance of additional DDR stock, and on condition that JDN enter into a closing agreement with the Internal Revenue Service with respect to "certain tax issues," which Macnab described as "technical." He declined to describe their exact nature or place a value on them.
Macnab took the helm of JDN after the company disclosed in February 2000 that two former JDN executives had received nearly $5 million in undisclosed compensation. He is widely credited with salvaging the company. This February, he did not deny published reports that JDN was exploring sale options, and in May, JDN announced plans to find someone to replace him.
For a related story, see "DDR Buys JDN in $1-Billion Merger Deal" on GlobeSt.com's Philadelphia page.
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