Sakura Sogo REIT Investment Corp.'s board and its asset management company are rejecting Lion Partners GK's proposal to merge the Japanese property company with peer Star Asia Investment Corp. as they consider the merger proposal to be a threat to unit holders' investment.
In a filing, Sakura Sogo's board said the notice given to unit holders regarding a meeting to consider the proposal is an attempt to deceive its stakeholders as Lion Partners is forcing to merge the two with approval from more than 50% of Sakura Sogo's unit holders instead of the 67% legal requirement.
The board also noted missing key details in Lion Partners' proposal, such as the merger ratio, other benefits to shareholders, as well as other important financial data. It further stressed that the proposal to change its asset management company, aside from the executive director, could only benefit Star Asia.
As such, the board said the proposed merger will significantly destroy the value of investments and is not in the best interest of its unit holders. It is considering the attempt as a "hostile takeover," adding that Star Asia is making the offer to acquire Sakura Sogo's portfolio at less than fair market value. Sakura Sogo's board is recommending that unit holders resist the takeover attempt.
According to Lion Partners, the proposed merger between Sakura Sogo and Star Asia is expected to create a diversified REIT that will manage ¥158.4 billion of assets. It will also increase Sakura Sogo's revenue stability and distribution per unit by ¥100 in the short term.
As of May 17, US$1 was equivalent to ¥109.94.