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ESR-REIT to take over Viva under S$936.7M scheme of arrangement

Managers of ESR-REIT and Viva Industrial Trust finalized details of their proposed merger, disclosing that it will be executed via a trust scheme of arrangement that places the latter's worth at approximately S$936.7 million in implied equity value.

The merger, set to bring the combined entity at the fourth position in the list of largest industrial real estate investment trusts in Singapore, will occur with ESR paying Viva's stapled security holders 96 Singapore cents per stapled security on an ex-distributions basis.

The scheme consideration will be paid 10% in cash and 90% through the issuance of new ESR units, reflecting a 1.778x gross exchange ratio. Taking into account the 54-cent issue price for each new ESR unit, the security holders of Viva stand to receive S$9.60 in cash and 160 new ESR units for every 100 stapled securities held.

ESR and Viva's merger will result in an enlarged portfolio of 56 properties that are worth approximately S$3.0 billion and cover a total gross floor area of 13.6 million square feet. At the same time, the enlarged trust's market cap will rise to S$1.7 billion, with a free float of S$977 million.

The scheme is subject to, among other things, the consent of the Viva trust scheme amendments, Viva security holders, ESR unit holders and the Singapore Court.

The scheme concludes exclusive negotiations that the two started in January.

Citigroup Global Markets Singapore Pte. Ltd., RHB Securities Singapore Pte. Ltd. and United Overseas Bank Ltd. are serving as financial advisers to the ESR-REIT manager, while BofA Merrill Lynch is acting as the sole financial adviser to the managers of Viva.

As of May 17, US$1 was equivalent to S$1.34.