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DEXUS-IOF merger offer sweetens with additional cash distribution

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Capital Markets View – January 2021


DEXUS-IOF merger offer sweetens with additional cash distribution

Unitholders of Investa Office Fund,or IOF, will receive a special cash distribution of 7 Australian cents if the takeoverproposal by DEXUS Property Groupbecomes effective.

IOF'sindependent board committee announced the additional special distribution on March30. The special dividend will be paid on the implementation date of the DEXUS offer.Unit holders of record on the record date for the DEXUS bid will be eligible forthe special distribution. DEXUS agreed to the special payment, according to IOF.

If theproposal becomes effective, unit holders will receive the special distribution regardlessof their chosen type of consideration for the merger. The standard consideration for the deal comprised a cash-and-scripoffer of 82.29 cents and 0.424 DEXUS securities per IOF unit.

IOF saidthe implied value of the sweetened offer translates to A$4.24 per IOF unit.

In addition,IOF said the April 8 meeting to voteon the merger has been adjourned. It noted that this will allow IOF unit holdersto consider the supplementary explanatory memorandum about the offer that will beprovided to unit holders.

The companyalso addressed the rumorabout Mirvac Group, ChinaInvestment Corp. and Blackstone GroupLP submitting a competing offer for IOF, noting that it has not receivedand is not aware of such an offer.

The companyadded that its independent board committee undertook a strategic review of its optionsbefore agreeing to the DEXUS merger, and that the committee found the proposal tobe superior to all other alternatives.

Meanwhile,ISS and CGI Glass Lewis echoed the recommendationof IOF's board, saying unit holders should approve the A$10 billion business combinationwith DEXUS, The Australian Financial Reviewreported March 30. Both global proxy advisory firms serve as the advisers for IOFproxy subscribers.

As of March 29, US$1 was equivalentto A$1.32.