Swiss Jelmoli rejects e1.25bn Swiss Prime Site takeover bid

The board of directors of the recently-split Swiss department store property group and operator Jelmoli Holding has rejected a takeover bid from Zurich-based listed peer Swiss Prime Site, which this week said it has bought 30% of Jelmoli from majority owner Pelham Investments, controlled by a scion of the Opel carmaking family.

SPS said it bought 29.89% of Jelmoli share capital and will submit an exchange offer for remaining equity at the equivalent of CHF466.31 per share (e308). This values Jelmoli at around CHF1.9bn (e1.25bn). The deal, based on its net asset value at 31 March, is offered on a stock basis, with SPS offering 7.7 shares for each Jelmoli stock. If the deal goes through, it will create the biggest Swiss real estate group with a portfolio of some CHF8bn (e5.3bn). Jelmoli shares were last trading around CHF402, with SPS stock at just over CHF51.

SPS CEO Markus Graf told a news conference that a merger of the two groups is possible if the offer is rejected or fails to attract sufficient shareholder acceptance. A combined portfolio would consist of top assets in Zurich, Geneva and Basel, bring synergy potential and increase the attractiveness of the combined share for institutions. Some 30% of SPS occupation comprises the two large Swiss banks Credit Suisse and UBS so that a merger of the two groups' assets would bring diversification. Graf said a combination of the groups would bring cost savings of CHF25m-CHF30m annually. In addition, SPS is registered in the canton of Solothurn, one of the most low-tax regions of Switzerland.

Jelmoli said in a statement its takes notice of the announcement that SPS signed a purchase agreement with Pelham, controlled by Georg von Opel, to acquire all its 1.2m registered shares representing 29.8% of Jelmoli capital. Based on a first analysis, "the board of directors has reached the conclusion that the intended takeover offer by SPS substantially undervalues the company and contains a number of uncertainties regarding important company interests." It therefore recommends shareholders to take no action. Jelmoli in April launched separate listings for its stores property group, a long-established name on Swiss high streets, and a split-off unit name Athris Holding which combines other real estate assets and activities, mostly abroad. pfe (Full story to appear in PFE 124 due to be published on Monday 8 June)