British property giant Land Securities has agreed a £190m (€224m) deal to buy U+I Group, an urban renewal specialist with significant development sites in Ireland.
The takeover deal for stock market listed U+I at a price of 149-pence-a-share has been recommended by its board.
Shares shot up 72pc.
The deal will diversify LandSec from its high exposure to shopping centres and London office projects and into more mixed-use “neighbourhood” developments featuring a bigger emphasis on residential schemes.
In Ireland, U+I has struggled with some of its big schemes including last year when Kieran Wallace of KPMG was appointed receiver over certain assets of Development Securities Properties Donnybrook Limited and Spectre (Ballymoss House) Limited.
Both companies were jointly owned by U+I and Colony Capital.
The company subsequently confirmed its exit from its ‘Spectre’ joint venture platform with Colony but said it remained committed to the Dublin market and intends to concentrate on projects, like the White Heather Industrial Estate overlooking the Grand Canal in Dublin 8.
U+I paid about €7m in 2018 for the industrial estate, which fronts on to the Grand Canal and the South Circular Road.
The 2.84 acre estate was subsequently rezoned for residential use unlocking a potential windfall thanks to its canal-side frontage close to the city centre.
That strategy is consistent with the UK where the company has been targeting so-called mixed-use developments that include housing.
U+I has major ongoing projects at Mayfield in Manchester and Morden Wharf in London’s Greenwich district.
“The acquisition recognises the value from combining U+I’s front-end development capabilities, placemaking skills and portfolio of core regeneration projects which require funding, with LandSec’s development expertise and strong balance sheet,” the company said in a statement.
The deal “demonstrates management’s desire to implement its new strategy and the pace at which it wants to achieve that change,” analysts at RBC Capital Markets wrote in a note about the transaction.
“We believe its new strategy will create value, but that a key concern among investors is that it will take a significant time to become evident.”
The firm has an Outperform rating on the stock.
Rothschild was sole financial adviser to LandSec and UBS Group AG to U+I, according to the statement.
Additional reporting Bloomberg