Companies to Combine in All-Share Transaction with a Combined
Enterprise Value of US$8.2 Billion
Enhances Portfolio Diversification with Flexibility to Allocate
Capital Across Asset Classes and Geographic Markets
Intention to Increase First Quarterly Dividend by 12% After
Transaction Close
BEVERLY HILLS, Calif. & LONDON--(BUSINESS WIRE)--
Kennedy-Wilson Holdings, Inc. (NYSE:KW) (“KW”), a global real estate
investment company, and Kennedy Wilson Europe Real Estate Plc (LSE:KWE)
(“KWE”), an LSE listed property company that invests in direct real
estate and real estate loans in Europe, today announced that they have
reached agreement on the terms of a recommended all-share combination
transaction that will create a leading global real estate investment and
asset management platform. As a result of the transaction, KWE will
become a wholly owned subsidiary of KW.
The transaction will be effected by means of a court-sanctioned scheme
of arrangement under Article 125 of the Jersey Companies Law. Under the
terms of the transaction, each KWE shareholder will be entitled to
receive 0.667 new KW shares for each KWE share held by it. Based on the
US$22.50 closing price of KW shares on April 21, 2017, the last trading
day prior to the announcement, and a GBP / USD exchange rate of 1.2779,
the implied value per share of KWE is 1,174 pence, which represents a
premium of approximately 20.0% to the closing price of 979 pence per KWE
share on April 21, 2017 and 22.4% to the volume weighted average closing
price of 960 pence per KWE share for the three month period ended April
21, 2017. Based on pro forma ownership, existing KW shareholders will
own approximately 64% and former KWE shareholders will own approximately
36% of KW following completion of the transaction.
William J. McMorrow, Chairman and Chief Executive Officer of KW, said,
“This transaction represents one of the most significant milestones in
our 40-year history. The combination will create a leading global real
estate investment and asset management platform with enhanced
diversification supported by the continuity of leadership with a strong,
proven track record. The enterprise will benefit from greater scale and
improved liquidity, which will enhance our ability to generate
attractive risk-adjusted returns for our shareholders. The transaction
significantly improves our recurring cash flow profile, and, as such, we
are pleased to announce our intention to increase our first quarterly
dividend by approximately 12% upon completing the transaction, which
demonstrates our confidence in the combination and our long-term
prospects.”
Charlotte Valeur, Non-Executive Chair of KWE, said, “I and the other
independent directors of KWE are very pleased to announce that we have
reached agreement on the terms of an all-share transaction between KW
and KWE, which will give KWE shareholders the opportunity to gain
exposure to a diversified asset base.”
Strategic & Financial Benefits of the Transaction
KW believes that the transaction:
-
Creates a leading real estate investment and asset managementplatform
with increased scale and liquidity, having a combined market
capitalization of approximately US$4.0 billion and an enterprise value
of approximately US$8.2 billion. Given this increased scale, KW will
receive greater weighting in key US stock indices following the
completion of the transaction, including the Russell 2000 (in which it
is expected to be the fourth largest real estate company by market
capitalization) and the Russell 3000, enhancing liquidity in the stock
and broadening the potential investor base;
-
Creates a global portfolio of over 400 properties with an enhanced
geographic mix and broad diversification across real estate sectors;
-
Provides flexibility to allocate capital globally across asset classes
and geographic markets. KW’s approximately 400 employees in the United
States and approximately 100 employees in Europe provide the knowledge
base to continue to make investment decisions that offer attractive
risk-adjusted returns on capital. Additionally, KW’s enhanced scale
and profile may result in greater access to capital and an expanded
set of acquisition and development opportunities;
-
Establishes a company with a strong pro forma capital structure, with
pro forma leverage of approximately 51% net debt to enterprise value,
access to diverse, global equity and debt capital sources, and
approximately US$1.4 billion of pro forma liquidity (as of December
31, 2016) to support growth;
-
Generates certain synergies resulting from the elimination of
duplicative public company costs, and potential additional income
arising from KW’s ability to manage capital more efficiently as a
result of the combination, which is expected to result in expanded
capacity for investment to drive growth; and
-
Will be accretive to adjusted net income per share immediately
following the closing and provides the potential to increase cash
flows available for shareholder distribution. KW intends to increase
its first quarterly dividend by approximately 12% upon completion of
the transaction.
Leadership
Since its IPO, KWE has been managed by KW’s leadership team, utilizing
KW’s proven platform and systems. Upon the closing of the transaction,
there will be no change to leadership or systems, which will enable a
seamless integration and should minimize integration risk and disruption
to the business. Additionally, KW’s Board and management will own
approximately 13% of the shares in the combined company following
completion of the transaction, which creates a strong alignment with
shareholders.
Closing and Approvals
The transaction is expected to close during the third quarter of 2017,
subject to customary closing conditions including, among other things,
receipt of KW and KWE shareholder approval.
The KW Board of Directors has unanimously approved the transaction. The
KW Board of Directors considers the transaction to be in the best
interests of KW and its stockholders and intends to unanimously
recommend that KW stockholders vote in favor of the issuance of KW
shares in connection with the transaction.
The independent directors of KWE have indicated to KWE shareholders that
they intend unanimously to recommend the transaction to KWE shareholders
in due course in the formal circular relating to the scheme of
arrangement under Jersey law by which the transaction will be
implemented.
Advisors
Goldman Sachs is acting as lead financial advisor to KW. BofA Merrill
Lynch is serving as financial advisor to KW. Wachtell, Lipton, Rosen &
Katz is serving as legal advisor in the US to KW, Macfarlanes LLP is
acting as UK legal advisor to KW, and Ogier is acting as Jersey legal
advisor to KW.
Rothschild is acting as lead financial adviser to the independent
directors of KWE. J.P. Morgan Cazenove is acting as financial adviser to
the independent directors of KWE. Sullivan & Cromwell LLP is serving as
legal advisor to KWE in the US and UK. Appleby is serving as Jersey
legal advisor to KWE.
Conference Call
KW will host a conference call for research analysts and investors to
discuss the transaction on April 24, 2017 at 1:30 p.m. (London Time) /
8:30 a.m. (New York Time). The direct dial-in number for the conference
call is (866) 610-1072 for US callers, 080 00288438 for UK callers, and
+1 (973) 935-2840 for international callers. The conference ID is
12445221. The webcast will be available at: http://event.on24.com/wcc/r/1414749-1/EFCEFA744FBC9C1C6596BC9FB879D24B.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect
of the proposed transaction, including the issuance of shares of KW
common stock in connection therewith. In connection with such proposed
share issuance, KW expects to file a proxy statement on Schedule 14A
with the Securities and Exchange Commission (the “SEC”). To the extent
KW effects the transaction as a scheme under Jersey law, the issuance of
KW common stock is not be expected to require registration under the
Securities Act of 1933, as amended (the “Securities Act”), as a result
of an exemption provided by Section 3(a)(10) under the Securities Act.
In the event that KW determines to conduct the transaction pursuant to a
takeover offer or otherwise in a manner that is not exempt from the
registration requirements of the Securities Act, it will file a
registration statement with the SEC containing a prospectus with respect
to the KW common stock that would be issued in the transaction.
INVESTORS AND SECURITY HOLDERS OF KW ARE URGED TO READ THESE MATERIALS
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT
DOCUMENTS IN CONNECTION WITH THE TRANSACTION THAT KW WILL FILE WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT KW, THE PROPOSED ISSUANCE OF KW COMMON STOCK, AND THE
PROPOSED TRANSACTION. The proxy statement and other relevant materials
in connection with the proposed issuance of KW common stock and the
transaction (when they become available), and if required, the
registration statement/prospectus and other documents filed by KW with
the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov.
In addition, investors and security holders may obtain free copies of
the documents filed with the SEC at KW’s website, www.kennedywilson.com,
or by contacting our Investor Relations department in writing at 151 S.
El Camino Dr. Beverly Hills, CA 90212.
KW believes that KW, KWE, their respective directors and certain KW
executive officers may be deemed to be participants in the solicitation
of proxies from KW shareholders with respect to the transaction,
including the proposed issuance of shares of KW common stock.
Information about KW’s directors and executive officers and their
ownership of KW shares and KWE shares or securities referencing KWE
shares is provided in KW’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2016, which was filed with the SEC on February
27, 2017, KW’s proxy statement for its 2016 Annual Meeting of
Stockholders, which was filed with the SEC on April 29, 2016, and KWE’s
Annual Report for the year ended December 31, 2016, which was filed with
the SEC by KW on Form 8-K on March 23, 2017. Information about the
directors of KWE is provided in KWE’s Annual Report for the year ended
December 31, 2016, which was filed with the SEC by KW on Form 8-K on
March 23, 2017. Information regarding the identity of the potential
participants, and their direct or indirect interests in the
solicitation, by security holdings or otherwise, will be provided in the
proxy statement and other materials to be filed with the SEC in
connection with the Transaction and issuance of shares of KW common
stock.
NEITHER KWE NOR ANY INDEPENDENT DIRECTOR OF KWE ACCEPTS ANY
RESPONSIBILITY FOR ANY INFORMATION CONTAINED IN THIS ANNOUNCEMENT. FOR
THE AVOIDANCE OF DOUBT, NEITHER THE INDEPENDENT DIRECTORS OF KWE NOR
ROTHSCHILD NOR J.P. MORGAN CAZENOVE EXPRESS ANY VIEW AS TO THE
ADVANTAGES OR DISADVANTAGES OF THE TRANSACTION AS FAR AS KW SHAREHOLDERS
ARE CONCERNED.
Goldman Sachs International, which is authorized by the Prudential
Regulation Authority and regulated by the FCA and the Prudential
Regulation Authority in the UK, and Goldman, Sachs & Co. (in their
capacity as financial advisers to KW) (together, “Goldman Sachs”), are
acting exclusively for KW and no one else in connection with the
transaction or any other matter referred to in this announcement and
will not be responsible to anyone other than KW for providing the
protections afforded to clients of Goldman Sachs, or for providing
advice in relation to the transaction or any other matters referred to
in this announcement.
Merrill Lynch International, which is authorized by the Prudential
Regulation Authority and regulated by the FCA and the Prudential
Regulation Authority in the UK, and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (together with Merrill Lynch International, “BofA
Merrill Lynch”) are acting exclusively for KW and no one else in
connection with the transaction or any other matter referred to in this
Announcement and will not be responsible to anyone other than KW for
providing the protections afforded to clients of BofA Merrill Lynch, or
for providing advice in relation to the transaction or any other matters
referred to in this Announcement.
Rothschild, which is authorized and regulated by the Financial
Conduct Authority (the “FCA”) in the UK, is acting exclusively for the
independent directors of KWE and no one else in connection with the
transaction and any other matter referred to in this announcement and
will not be responsible to anyone other than the independent directors
of KWE for providing the protections afforded to clients of Rothschild,
or for providing advice in relation to the transaction or any other
matters referred to in this announcement.
J.P. Morgan Limited (which conducts its UK investment banking
business as J.P. Morgan Cazenove (“J.P. Morgan Cazenove”)), which is
authorized and regulated in the UK by the FCA, is acting exclusively for
the independent directors of KWE and no one else in connection with the
transaction or any other matter referred to in this announcement and
will not be responsible to anyone other than the independent directors
of KWE for providing the protections afforded to clients of J.P. Morgan
Cazenove, or for providing advice in relation to the transaction or any
other matters referred to in this announcement.
Forward-Looking Statements
This communications contains “forward-looking” statements concerning
future events and financial performance. These forward-looking
statements are necessarily estimates reflecting the judgment of senior
management based on current estimates, expectations, forecasts and
projections and include comments that express current opinions about
trends and factors that may impact future operating results. Disclosures
that use words such as “believe,” “anticipate,” “estimate,” “intend,”
“could,” “plan,” “expect,” “project” or the negative of these, as well
as similar expressions, are intended to identify forward-looking
statements.
Forward-looking statements are not guarantees of future performance,
rely on a number of assumptions concerning future events, many of which
are outside of the companies’ control, and involve known and unknown
risks and uncertainties that could cause actual results, performance or
achievement, or industry results, to differ materially from any future
results, performance or achievements, expressed or implied by such
forward-looking statements. No assurance can be given that the proposed
transaction will happen as anticipated or at all. In evaluating these
statements, you should specifically consider the risks referred to in
our filings with the SEC, including KW’s Form 10-K, which are available
on KW’s website and at www.sec.gov,
including, but not limited to, the following factors: the occurrence of
any event, change or other circumstance that could result in abandonment
of the transaction; the inability to complete the transaction in a
timely manner or at all; difficulties in successfully integrating the
two companies following completion of the transaction and the risk of
not fully realizing expected synergies from the transaction in the time
frame expected or at all; the risk that the announcement and pendency of
the transaction disrupts current plans and operations, increases
operating costs, results in management distraction or difficulties in
establishing and maintaining relationships with third parties or makes
employee retention and incentivization more difficult; the outcome of
any legal proceedings that may be instituted against the companies in
connection with the announcement and pendency of the transaction; any
limitations on the companies’ ability to operate their businesses during
the pendency of the transaction; disruptions in general economic and
business conditions, particularly in geographies where the companies’
respective businesses may be concentrated; volatility and disruption of
the capital and credit markets, higher interest rates, higher loan
costs, less desirable loan terms and a reduction in the availability of
mortgage loans, all of which could increase costs and could limit the
companies’ ability to acquire additional real estate assets; continued
high levels of, or increases in, unemployment and general slowdowns in
commercial activity; the companies’ leverage and ability to refinance
existing indebtedness or incur additional indebtedness; an increase in
the companies’ debt service obligations; the companies’ ability to
generate a sufficient amount of cash from operations to satisfy working
capital requirements and to service their existing and future
indebtedness; the companies’ ability to achieve improvements in
operating efficiency; foreign currency fluctuations; adverse changes in
the securities markets; the companies’ ability to retain their senior
management and attract and retain qualified and experienced employees;
the companies’ ability to retain major clients and renew related
contracts; trends in use of large, full-service commercial real estate
providers; changes in tax laws in the United States, Europe or Japan or
other jurisdictions that reduce or eliminate deductions or other tax
benefits the companies receive; the possibility that future acquisitions
may not be available at favorable prices or upon advantageous terms and
conditions; the companies’ ability to dispose of assets; and costs
relating to the acquisition of assets the companies may acquire could be
higher than anticipated.
Except as required by law, KW does not intend to update publicly any
forward-looking statements, whether as a result of new information,
future events, changes in assumptions or otherwise.
Non-GAAP Measures
This press release refers to adjusted net income per share, which is a
non-GAAP financial measure. A description of and important disclosures
with respect non-GAAP financial measures used by KW and the
reconciliation of the most directly comparable GAAP financial measures
in KW’s investor presentation being issued concurrently with this press
release, which is posted on the Investor Relations section of KW’s
website and has been filed with the SEC as an exhibit to a Current
Report on Form 8-K dated April 24, 2017.
About Kennedy Wilson
Kennedy Wilson (NYSE:KW) is a global real estate investment company. We
own, operate, and invest in real estate both on our own and through our
investment management platform. We focus on multifamily and commercial
properties located in the Western U.S., UK, Ireland, Spain, Italy and
Japan. To complement our investment business, the Company also provides
real estate services primarily to financial services clients. For
further information on Kennedy Wilson, please visit www.kennedywilson.com.
About Kennedy Wilson Europe Real Estate Plc
Kennedy Wilson Europe Real Estate Plc is an LSE listed property company
that invests in real estate across the UK, Ireland, Spain and Italy. It
aims to generate superior shareholder returns by unlocking value of
under-resourced real estate across its target geographies. Its existing
portfolio is primarily invested across office and retail in the UK and
Ireland, weighted towards London, the South East and Dublin. For further
information on Kennedy Wilson Europe Real Estate Plc, please visit www.kennedywilson.eu.
KW-IR
View source version on businesswire.com: http://www.businesswire.com/news/home/20170424005671/en/
Kennedy Wilson
Investors
Matt Windisch
Executive
Vice President
(310) 887-6400
[email protected]
or
Press
Joele
Frank, Wilkinson Brimmer Katcher
Meaghan Repko / Viveca Tress /
Matt Gross
(212) 355-4449
or
Kennedy Wilson Europe
Real Estate Plc
Inquiries from KWE shareholders on matters
relating to KWE
Charlotte Valeur
Non-Executive Chair of
the Board
+44 (0)1534 835 722
Source: Kennedy-Wilson Holdings, Inc.