Blackstone Agrees to Buy St. Modwen Properties for $1.7 Billion

Jack Sidders, Bloomberg News

(Bloomberg) -- Blackstone Group Inc. has agreed to buy St. Modwen Properties Plc in a bid that values the British developer at about 1.2 billion pounds ($1.7 billion).

The purchase will give the private equity giant a bigger slice of the U.K.’s warehouse market. Blackstone is offering 542 pence per share in cash, according to a statement Thursday. Blackstone announced the bid earlier this month and St. Modwen had indicated it would accept the offer.

Competition for warehouses across Europe has intensified as global investors including Goldman Sachs Group Inc., Cerberus Capital Management LP and GIC Pte bet on rising rental income after the pandemic prompted more people to shift their shopping online. With U.K. warehouse lease agreements reaching a record in the first quarter, according to CBRE Group Inc., the asset class is outperforming any other type of commercial property.

Blackstone has been racing to scale up its Mileway unit that focuses on urban warehouse properties close to population centers that are in demand from online retailers seeking to cut delivery times. Recent U.K. deals include the purchase of a 473 million pound portfolio from Prologis Inc. in October and a 118.5 million pound deal for the Bedfont Logistics Park in March.

St. Modwen has three main business units, focusing on housebuilding, warehouses and urban regeneration. After shifting its focus toward logistics in the past two years, that unit now accounts for about 49% of the company’s 1.37 billion pound portfolio, according to a February earnings statement. The rest is split almost equally between its house building arm and the strategic land and regeneration unit which the company has been shrinking.

The offer represents a premium of 21.1% over St Modwen’s price the day before the Blackstone offer was announced. One of the developer’s biggest investors said the proposal was too low. J O Hambro Capital Management Ltd., which owns just over 9% of St. Modwen said at the time it would resist the offer.

Read more: St. Modwen Investor Says $1.7 Billion Blackstone Bid Too Low