# Slate Office REIT reaches terms on cash offer for Yew Grove REIT

- Link: https://www.directorstalkinterviews.com/slate-office-reit-reaches-terms-on-cash-offer-for-yew-grove-reit/4121033558
- Published: 2021-11-16T07:11:20+00:00
- Author: Giles

**Slate Office REIT** and Yew Grove REIT plc (LON:YEW) have announced that they 
have reached agreement on the terms of a cash offer by Slate Office Ireland Investment
Limited (“**Bidco**“), pursuant to which Bidco, an indirect wholly‑owned subsidiary
of Slate, would acquire the entire issued and to be issued share capital of Yew 
Grove at a price of €1.017 per share. The Cash Offer, if made, values the entire
issued and to be issued share capital of Yew Grove at approximately €127.8 million,
which together with total reported borrowings at 30 June 2021 of €49.5 million implies
an acquisition enterprise value of €177.4 million.

The making of the Cash Offer is conditional only on the closing of the bought deal
offering by Slate for subscription receipts and convertible unsecured subordinated
debentures, which bought deal offering was announced by Slate on 15 November 2021.
This condition must be satisfied before the Cash Offer can be made.

Slate and Yew Grove have agreed that, subject only to completion of the Offering
by no later than 29 November 2021, they shall, in accordance with and for the purposes
of Rule 2.5 of the Irish Takeover Rules, procure the release of an announcement 
of a firm intention to make the Cash Offer.

Slate and Yew Grove have agreed that if the Rule 2.5 Announcement has not been released
by 11:59 pm on 29 November 2021 (or such later date as they may agree in writing)
the Cash Offer will not be made.

If the Cash Offer is made, it is intended that it will be implemented by way of 
a High Court sanctioned scheme of arrangement under Chapter 1 of Part 9 of the Act(
the “**Scheme**“) (or, if Slate elects, subject to the terms of the Transaction 
Agreement, compliance with the Irish Takeover Rules and with the consent of the 
Irish Takeover Panel, a Takeover Offer).

The Cash Offer, if made, will represent a premium of approximately:

·      1.7% to Yew Grove’s closing share price of €1.00 on 15 November 2021 (representing
the last business day prior to the publication of this Announcement); and

·      3.7% to Yew Grove’s volume weighted average share price of approximately 
€0.98 over the 180 trading day period ending on 15 November 2021.

Having taken into account the relevant factors and applicable risks, the Yew Grove
Board, which has been so advised by Goodbody, as financial adviser and Rule 3 adviser
to Yew Grove as to the financial terms of the Cash Offer, considers the terms of
the Cash Offer as set out in this Announcement to be fair and reasonable. In providing
its advice to the Yew Grove Board, Goodbody has taken into account the commercial
assessments of the Yew Grove Directors.  Accordingly, if the Cash Offer is made,
the Yew Grove Board have agreed to unanimously recommend that Yew Grove Shareholders
vote in favour of the Scheme, as they have irrevocably committed to do in respect
of their own beneficial holdings of, in aggregate, 5,514,350 Yew Grove Shares which
represent approximately 4.41% of the issued share capital of Yew Grove as of 15 
November 2021 (being the latest practicable date prior to the publication of this
Announcement).

In agreeing to recommend the Cash Offer, if made, the Yew Grove Board has taken 
into account a number of factors, including the following:

·      at the time of its IPO in 2018, Yew Grove targeted building a property portfolio
worth between €300 and €500 million over the following three years;

·      the Directors are conscious of the challenges of raising capital at the scale
and timeframe required to fully exploit Yew Grove’s attractive investment pipeline;

·      the Acquisition allows Yew Grove Shareholders to realise their full investment
in Yew Grove for cash in the near term at an attractive valuation; and

·      the Acquisition implies a 1.7% premium to Yew Grove’s closing share price
of €1.00 on 15 November 2021 (representing the last business day prior to the publication
of this Announcement) and 3.7% premium to Yew Grove’s volume weighted average share
price of approximately €0.98 over the 180 trading day period ending on 15 November
2021.

**Q3 Dividend**

In addition, the Yew Grove Board announces that it has approved the payment of an
interim dividend of €0.012 per share in cash, bringing the total amount to be paid
to Yew Grove Shareholders, should the Cash Offer be made, to €1.029 per Yew Grove
Share in cash.

This interim dividend will be a Property Income Distribution and will be paid on
16 December 2021 to shareholders appearing on the register of members of Yew Grove
on 26 November 2021 with a corresponding ex-dividend date of 25 November 2021. Such
payment will be made irrespective of whether or not the Cash Offer proceeds.

**Transaction Agreement**

Slate, Bidco and Yew Grove have entered into a Transaction Agreement dated 15 November
2021 which contains certain assurances in relation to the implementation of the 
Scheme and other matters related to the Acquisition. If the Cash Offer is made, 
a summary of the principal terms of the Transaction Agreement will be set out in
the Rule 2.5 Announcement and the Scheme Document.

The Transaction Agreement provides that where the Yew Grove Board determines that
a Yew Grove Superior Proposal has been received, Yew Grove shall provide Bidco with
an opportunity, for a period of five Business Days from the time of delivery to 
Bidco of notice in writing from Yew Grove advising that the Yew Grove Board has 
determined that a Yew Grove Superior Proposal has been received together with details
of the material terms of such Yew Grove Superior Proposal, to increase or modify
the Consideration and such other terms and conditions such that the Yew Grove Superior
Proposal would no longer constitute a Yew Grove Superior Proposal.

The Transaction Agreement may be terminated if the Rule 2.5 Announcement has not
been published by 11:59 pm on 29 November 2021 (or such later date as the parties
thereto may agree in writing).

**Expenses Reimbursement Agreement**

Yew Grove has entered into an Expenses Reimbursement Agreement dated 15 November
2021 with Slate and Bidco, the entry into of which has been approved by the Irish
Takeover Panel. Under the Expenses Reimbursement Agreement, subject to the Rule 
2.5 Announcement being made prior to 29 November 2021, Yew Grove has agreed to pay
to Bidco in certain circumstances set out below an amount equal to all documented,
specific and quantifiable third party costs and expenses incurred by Bidco, or any
member of the Slate Group, or on its or their behalf, for the purposes of, in preparation
for, or in connection with the Acquisition, including legal, accounting, property,
financial and commercial due diligence, arranging financing and engaging advisers
to assist in the process, provided that the gross amount payable by Yew Grove to
Bidco shall not, in any event, exceed such sum as is equal to 1 per cent. of the
total value of the issued and to be issued share capital of Yew Grove that is the
subject of the Acquisition (excluding, for the avoidance of doubt, any Yew Grove
Shares held in treasury and any interest in such share capital held by Slate or 
any persons Acting in Concert with Slate) as ascribed by the terms of the Acquisition
as set out in this Announcement.

The Irish Takeover Panel has consented to the entry by Yew Grove into the Expenses
Reimbursement Agreement. Each of the Yew Grove Board and Goodbody as financial adviser
and Rule 3 adviser to Yew Grove, has confirmed in writing to the Irish Takeover 
Panel that for the purposes of the Note to Rule 21.2 of the Irish Takeover Rules,
they consider the terms of the Expenses Reimbursement Agreement to be in the best
interests of Yew Grove Shareholders.

The circumstances in which such payment will be made are if:

(a)           the Transaction Agreement is terminated:

(i)    by Bidco for the reason that the Yew Grove Board or any committee thereof:

(A)   withdraws (or modifies in any manner adverse to Bidco), or fails to make when
required pursuant to the Transaction Agreement, or proposes publicly to withdraw(
or modify in any manner adverse to Bidco), the Scheme Recommendation or, if applicable,
the recommendation to the holders of Yew Grove Shares from the Yew Grove Board to
accept the Takeover Offer; or

(B)   approves, recommends or declares advisable or proposes publicly to approve,
recommend or declare advisable, any Yew Grove Alternative Proposal (it being understood,
for the avoidance of doubt, that the provision by Yew Grove to Bidco of notice or
information in connection with a Yew Grove Alternative Proposal or Yew Grove Superior
Proposal as required or expressly permitted by the Transaction Agreement shall not,
in each case, in and of itself, satisfy this paragraph (B)); or

(C)   otherwise takes any action or discloses a position that constitutes a “Yew
Grove Change of Recommendation” under clause 5.2(e) of the Transaction Agreement;
or

(ii)       by Yew Grove, at any time prior to obtaining the Yew Grove Shareholder
Approval, in order to enter into any agreement, understanding or arrangement providing
for a Yew Grove Superior Proposal; or

(b)          all of the following occur:

(i)    prior to the Scheme Meeting, a Yew Grove Alternative Proposal is formally
publicly disclosed by Yew Grove or any person shall have formally publicly announced
an intention (whether or not conditional) to make a Yew Grove Alternative Proposal
and, in each case, such disclosure or announcement is not publicly withdrawn without
qualification at least three Business Days before the date of the Scheme Meeting;
and

(ii)    the Transaction Agreement is terminated by Bidco for the reason that Yew
Grove shall have breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in the Transaction
Agreement, which material breach or failure to perform:

(A)   would result in a failure of any of the Conditions; and

(B)   if curable, is not cured within thirty (30) days following Bidco’s delivery
of written notice to Yew Grove of such breach or failure to perform (which notice
shall state Bidco’s intention to terminate the Transaction Agreement pursuant to
clause 10 of the Transaction Agreement and the basis for such termination); and

(iii)   a Yew Grove Alternative Proposal is consummated, or a definitive agreement
providing for a Yew Grove Alternative Proposal is entered into, in each case with
the person referred to in paragraph (b)(i) and within 12 months after such termination
and such Yew Grove Alternative Proposal is consummated pursuant to that definitive
agreement; or

(c)           all of the following occur:

(i)    prior to the Scheme Meeting, a Yew Grove Alternative Proposal is formally
publicly disclosed by Yew Grove or any person shall have formally publicly announced
an intention (whether or not conditional) to make a Yew Grove Alternative Proposal
and, in each case, such disclosure or announcement is not publicly withdrawn without
qualification at least three Business Days before the date of the Scheme Meeting;
and

(ii)    the Transaction Agreement is terminated by either Yew Grove or Bidco for
the reason that the Scheme Meeting or the EGM shall have been completed and the 
Scheme Meeting Resolution or the EGM Resolutions, as applicable, shall not have 
been approved by the requisite majority of votes; and

(iii)   the Yew Grove Alternative Proposal referred to in paragraph (c)(i) is consummated,
or a definitive agreement providing for a Yew Grove Alternative Proposal is entered
into, in each case with the person referred to in paragraph(c)(i) within twelve (
12) months after such termination and such Yew Grove Alternative Proposal is consummated
pursuant to that definitive agreement.

The Expenses Reimbursement Agreement will automatically terminate if the Rule 2.5
Announcement has not been published by 11:59 pm on 29 November 2021 (or such later
date as Yew Grove, Slate and Bidco may agree in writing).

**Irrevocable Commitments**

Each of the directors of Yew Grove has given an irrevocable undertaking to Slate
to vote in favour of the relevant shareholder resolutions that will be required 
to implement the acquisition of Yew Grove by Slate should the Cash Offer be made.
The directors of Yew Grove hold, in aggregate, 5,514,350 Yew Grove Shares which 
represent approximately 4.41% of the issued share capital of Yew Grove as of 15 
November 2021 (being the latest practicable date prior to the publication of this
Announcement).

The irrevocable undertakings received from each of the Yew Grove Directors will 
cease to have effect on the earliest of the following: (i) the date on which the
Scheme becomes Effective; (ii) if the Rule 2.5 Announcement is not released by 11:
59 pm on 29 November 2021, 12.00 am on 30 November 2021 or such later date as Bidco
and Yew Grove may agree; (iii) if the Scheme Document (or Takeover Offer Document,
if applicable) is not posted to Yew Grove Shareholders within 28 days of the date
of release of this Announcement (or within such longer period as the Irish Takeover
Panel may agree), the day that is 29 days after the date of this Announcement (or
the day after the end of any longer period as aforesaid); (iv) the date that Bidco
announces that it does not intend to make or proceed with the Acquisition; (v) the
date on which the Transaction Agreement is terminated; and (vi) the date on which
the Acquisition lapses or is withdrawn, provided that the Acquisition shall not 
be deemed to have been withdrawn or lapsed only as a result of Bidco exercising 
its right to implement the Acquisition by way of a Takeover Offer rather than by
way of a Scheme or vice versa.

**General**

The Cash Offer, the Acquisition and the Scheme, if made or proposed, will be subject
to the Conditions and certain further terms set out in Appendix I to this Announcement.
Appendix II to this Announcement contains definitions of certain expressions used
in this Announcement. Appendix III to this Announcement contains certain sources
of information and bases of calculation contained in this Announcement.

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