UK REIT Brixton has reached an agreement on the terms of a takeover by larger rival Segro, making a buyout by a private equity real estate firm less likely.
In a London stock exchange announcement this morning, Segro – which dwarfs Brixton in size in terms of market capitalization – said it had a “firm intention” to bid for its smaller rival having agreed to offer 1.75 Segro shares for each share in Brixton.
Though a formal offer is still pending, the announcement that the two boards have reached “a possible recommended offer” means that consolidation of the two companies is more likely than takeover by a private property fund.
Both MGPA and The Blackstone Group have been linked with Brixton in past weeks, but neither firm has issued a statement about making an offer.
Private equity firms, however, have taken advantage of Brixton’s weak balance sheet.
In recent weeks, Paris-based AEW Europe and New York’s Westbrook Partners have purchased property portfolios from the company, which has run into trouble by piling on too much debt.