(Bloomberg) — Monmouth Real Estate Investment Corp. received an unsolicited takeover bid from Starwood Capital Group that could upend the company’s plans to be acquired by Sam Zell’s Equity Commonwealth, according to people familiar with the matter.
Monmouth, a real estate investment trust that focuses on industrial property, said in a statement Monday it had received an all-cash takeover offer from a “large private investment firm” for $18.70 a share. It didn’t identify the buyer.
Barry Sternlicht’s Starwood is the rival bidder, and was part of the original strategic review process earlier this year that resulted in the deal for Monmouth to sell itself to Equity Commonwealth, the people said, asking not to be identified because the matter is private.
Monmouth said its board was evaluating the new proposal, which it said amounted to a purchase price of $19.51 a share that would be reduced by about $62 million due to the termination fee on the original deal, and a dividend of 18 cents a share that was to be issued as part of the original transaction.
A representative for Starwood declined to comment. A representative for Monmouth declined to comment beyond the statement issued earlier Monday.
Zell’s Deal
Monmouth announced in May it had agreed to be acquired by Zell’s firm in a deal that valued it at about $3.4 billion, including debt. The terms called for Monmouth investors to get 0.67 shares of Equity Commonwealth for each share they own, which amounts to about $18.10 a share based on Monday’s closing price, plus the 18 cents-per-share dividend. Monmouth shares gained 1.5% to close at $19 on Monday.
Blackwells Capital, a Monmouth shareholder that had previously made a bid of its own for Monmouth, had called Equity Commonwealth’s offer “wholly inadequate.” Blackwells has also nominated four directors to the board of Monmouth.
Chicago-based Equity Commonwealth, part of Zell’s Equity Group Investments LLC, would hold about 65% of the combined entity, and add about 120 industrial properties across 31 U.S. states with the acquisition.
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