By Lisa Kerner
Charlotte, N.C., Feb. 12 - GMH Communities Trust has entered into two definitive agreements for the sale of its military and student housing divisions. The total per-share value of the transactions is some $9.61, or a 72% premium to GMH's closing price on Feb. 11.
The first agreement is a securities purchase agreement with a U.S. subsidiary of Balfour Beatty plc in which Balfour will purchase all of the issued and outstanding capital stock and limited liability company interests of GMH's military housing division for $350 million in cash.
Net distribution to GMH common shareholders and to the unitholders of GMH Communities, LP is expected to be about $4.08 per share/unit, which will be paid in two separate distributions.
Proceeds from the sale will be used to pay off and terminate GMH's line of credit and for working capital.
The transaction, slated to close in the second quarter, has been unanimously approved by GMH's board of trustees and is not subject to shareholder approval or a financing condition.
"This transaction allows our entire organization to remain intact, while also providing us with the access to capital that is needed to continue to grow our current business line, as well as pursue other privatization opportunities," GMH military housing president Bruce Robinson said in a company news release.
"The acquisition of GMH's military accommodation business is central to implementing our U.S. strategy of building a high-quality, domestic U.S. business similar to our very successful U.K. model," Balfour chief executive officer Ian Tyler added.
Merger with American Campus to follow
The second agreement is a merger agreement in which an American Campus Communities, Inc. subsidiary will acquire GMH following the Balfour transaction.
GMH holders will be entitled to receive 0.07642 of an American Campus share of common stock and $3.36 in cash, or a total consideration of roughly $5.53, for each common share of GMH and each unit of the company operating partnership.
GMH, in connection with the merger, expects to sell its home office immediately prior to the transaction's close. In addition, the company will have the right to sell 10 additional student housing assets, with a percentage of the proceeds payable to shareholders and unitholders.
There can be no assurance that GMH will successfully dispose of those assets, the company said.
The merger is conditioned upon the sale of GMH's military housing division and shareholder approval but is not subject to a financing condition.
GMH's board of trustees has unanimously approved the deal, which is also slated to close in the second quarter.
"As major shareholders in the combined enterprise, we have the utmost confidence in American Campus' ability to grow our combined platforms in this dynamic industry," GMH chairman, president and CEO Gary M. Holloway Sr. said in the release.
GMH was advised by Wachovia Capital Markets, LLC, Goodwin Procter LLP and Reed Smith LLP.
Balfour is an engineering, construction, services and investment group based in London.
Based in Austin, Texas, American Campus is a real estate investment trust specializing in the acquisition, development and management of student housing properties in the United States.
GMH is a publicly traded real estate investment trust and specialty housing company based in Newtown Square, Pa.
| Acquirer: | Balfour Beatty plc
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| Target: | GMH Communities Trust, military housing division
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| Announcement date: | Feb. 12
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| Transaction total: | $350 million
|
| Price per share: | $4.08
|
| Expected closing: | Second quarter of 2008
|
| Stock price of target: | NYSE: GCT: $5.59 on Feb. 11
|
|
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| Acquirer: | American Campus Communities, Inc.
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| Target: | GMH Communities Trust
|
| Announcement date: | Feb. 12
|
| Price per share: | $5.53 per share, consisting of 0.07642 of an American Campus share and $3.36 in cash
|
| Expected closing: | Second quarter of 2008
|
| Stock price for acquirer: | NYSE: ACC: $28.43 on Feb. 11
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| Stock price of target: | NYSE: GCT: $5.59 on Feb. 11
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