Gazit-Globe (GZT) Unit to Merge with Regency Centers (REG)

November 15, 2016 6:09 AM EST

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Gazit-Globe (NYSE: GZT) announced that its US subsidiary Equity One (NYSE: EQY) has entered into a merger agreement with Regency Centers Corporation (NYSE: REG). The merger will create the largest high quality shopping center REIT in the US with a combined equity market cap of approx. US$ 11.7 billion and enterprise value of approx. US$ 15.6 billion.

Gazit-Globe will be the largest shareholder in the merged company and will hold approximately 13.2% of the shares. Chaim Katzman, Chairman of Gazit, who has until now served as Chairman of Equity One, will serve as Vice Chairman of the merged company. Two independent directors from Equity One board will also be added to the board of Regency. The share exchange transaction reflects a US$ 4.6 billion equity value for EQY and represents an approximately 13.7% premium (as of November 14, 2016). The transaction is expected to close in the first quarter or early in the second quarter of 2017, and is anticipated to generate a net gain of approx. NIS 1 billion for Gazit Globe. It is also subject to certain closing conditions, including shareholder approval of both companies.

This transaction will create a better, stronger and more diversified company for all shareholders. The merged entity will create additional value through the following key factors:

  • The combined company with a portfolio of complimentary assets will have an enhanced presence in both the real estate and capital markets.
  • The merged company will have 5.4 million square meters of leased GLA (1)
  • Operational efficiencies and synergies in assets and property management, as well as corporate G&A is expected to exceed NIS 100 million annually;
  • The merger will strengthen the Company’s position vis-à-vis its tenants, as well as its leasing and asset management activities.

The transaction will result in the following for Gazit Globe’s Shareholders:

  • Generates a significant premium above market value of Equity One’s shares for all shareholders.
  • A net gain of NIS 1 billion to Gazit Globe, NIS 5 per share.
  • As a result of the merger transaction the annual dividend from the merged entity will immediately increase by approx. 2.3% for all EQY shareholders.
  • Reduces leverage on a stand-alone basis.
  • Gazit Globe corporate level cost and accounting expense savings of approximately NIS 6 million NIS annually.
  • Improved liquidity of its shares, with an expected combined daily trading liquidity in excess of US $80 million.
  • Greater geographic and tenant diversification leading to a significant reduction in the risk profile of the combined company.
  • Gazit-Globe will be the largest shareholder in the merged company.
  • A merger transaction which does not carry any immediate tax consequences.

Chaim Katzman, Chairman of Gazit-Globe and Equity One: “I am very pleased with this merger transaction announced today. This is a major deal that will create the highest quality and largest shopping center company in the US. EQY shares acquired by REG at a premium of 13.7% to the market price is a reflection of the quality of EQY’s assets and the faith of REG in the company’s full potential. EQY has grown for two and a half decades from a single asset worth US$ 4.5 million to now being merged with REG in a transaction that results in an implied market capitalization of US$ 4.6 billion. The merged company will be the largest of its kind in North America with assets of more than US$ 15 billion and Gazit-Globe will be its largest shareholder. This transaction creates value for EQY’s shareholders including Gazit Globe and I am confident that we will continue to maximize value for our shareholders as well as for all shareholders of our subsidiaries in the future.”

Rachel Lavine, CEO of Gazit-Globe: “This transaction results in a number of compelling benefits for Gazit Globe, including a net gain of NIS 1 billion, NIS 5 per share, as well as annual savings totaling approximately NIS 6 million in Gazit Globe corporate expenses. I am convinced that this transaction will be followed by additional measures taken to further realize our long term objective of creating value for our shareholders.”

CONFERENCE CALL INFORMATION

Gazit-Globe will host a conference call in English on Tuesday, November 15, 2016 at 4:00 pm Israel Time / 3:00 pm Central European Time / 9:00 am Eastern Time.

Shareholders, analysts and other interested parties can access the conference call by dialing: United States 1888 281 1167, Canada 1866 485 2399, United Kingdom 0800 917 5108, International / Israel +972 3 9180608



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