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PALO ALTO, CA- Oriole Partnership, a three-member joint venture led by locally based Essex Property Trust, has proposed to acquire all the outstanding common shares of the Baltimore-based Town and Country Trust for $36 per share. The offer is $2.10 per share higher than the merger agreement Town and Country's board of trustees signed last month with Magazine Acquisition, a joint venture that includes affiliates of Morgan Stanley Real Estate and Onex Real Estate, a unit of Canada's publicly held Onex Corp. Including debt assumption, both deals are valued at between $1.3 billion and $1.4 billion.
In response to the new non-binding offer, Town and Country's board of trustees has provided non-public information to Oriole Partnership and will enter into discussions with the JV regarding the proposal, which includes the $20 million breakup fee specified in Town and Country's merger agreement with Morgan Stanley-Onex. Town and Country's board continues to recommend the existing transaction with Magazine Acquisition, but a firm bid from Oriole Partnership could change its mind.
Town and Country shareholders are scheduled to vote on the Magazine Acquisition merger agreement March 9. As a defense against just such an alternative offer, Magazine Acquisition has the right to match the Oriole Partnership proposal before Town and Country's board could change its recommendation or terminate the merger agreement in favor of a better one.
Meanwhile, the Morgan Stanley-Onex JV is accusing Town and Country of violating the merger agreement and paving the way for the higher rival bid, according to an SEC filing. It also is charging that a financial firm hired by Town & Country in late 2004 improperly used confidential information in support of the counteroffer and then joined in the counteroffer. Town & Country maintains it was entitled under the merger agreement to share information with a potential rival once its board determined the company might command a higher price, the filing said.
Essex partners in Oriole Partnership are UBS Wealth Management-North American Property Fund Limited, and AEW Oriole Co-Investment LLC. Banc of America Securities LLC and UBS Investment Bank LLC are acting as financial advisors to Oriole Partnership and Willkie Farr & Gallagher LLP is acting as legal counsel.
Essex Property Trust is a multifamily REIT with ownership interests in 26,800 units in 127 properties. AEW Oriole Co-Investment LLC was formed by AEW Capital Management LP to facilitate its investment in Oriole Partnership. AEW is acting as investment advisor to UBS Wealth Management-North American Property Fund Limited in connection with the proposed transaction. UBS Wealth Management-North American Property Fund Limited is focused on real estate investments in North America.
Essex isn't detailing its offer yet. Morgan's $1.3 billion offer is comprised of $750 million in equity and $440 million for the assumption of mortgage debt, plus about another $100 million for convertible notes.
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