WOOD Flash – Atrium: Gazit offer revised to EUR 3.63/share (EUR 0.6 via DPS by Atrium, EUR 3.03 cash by Gazit)

Gazit has increased its offer price for Atrium to EUR 3.63/share, in its latest attempt to take the company private – this time, via a merger. Atrium would pay a special dividend of EUR 0.60/share, and Gazit would pay EUR 3.03/share to the remaining minority investors in cash. The minority shareholders will vote on the offer at an EGM, which should take place in December. The offer price represents an 8% increase vs. the originally announced EUR 3.35/share, and implies some 15% discount to Atrium's last reported EPRA NRV, if we reduce it by the EUR 0.6/share special dividend, ceteris paribus. Assuming the FFO will recover to EUR 100m – a touch below the run-rate that Atrium was generating before the pandemic – the cash offer by Gazit would translate into around an 8-9% FFO yield. Given where the sector trades, our initial take is that the offer looks reasonable: except for NEPI Rockcastle, all the remaining large European shopping centre landlords are trading at a discount to book and relatively high FFO yields, reflecting the market’s concerns that the earnings may decline in the mid- to long-term, under pressure from the rising share of e-commerce.