Subject to approval by shareholders on 20 January, the mergerwill take effect retroactively from 30 April 2009. Requiringshareholder approval of both companies with a majority of 75% ofvotes, the exchange ratio offered for the 45.638% minorityshareholders of Immoeast – ie equity not already held by Immofinanz– will be three Immofinanz shares for two of Immoeast.

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Valuations of the companies have been based on the Net AssetValue as of 31 October 2009, and the exchange ratio verified withdiscounted cash flow valuations. The court appointed merger auditorPwC, and respective advising investment banks Morgan Stanley andDeutsche Bank, have all approved the terms of the merger.

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With the merger, all Immoeast assets and liabilities will betransferred to Immofinanz and the brand will be discontinued.Immofinanz will increase share capital by up to €589 millionagainst contribution in kind and will issue up to 567.4 million newshares to minority shareholders of Immoeast.

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The respective boards have also resolved to spin off Immoeastbusiness operations and shareholdings by downstream merger into the100% subsidiary IMBEA Immoeast. This will act as a holding companyfor Immoeast operations as well as guarantor for previously issueImmoeast convertible bonds 2009-2011.

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The companies said the final major restructuring measure will bea 'win-win' for shareholders: it will eliminate the majoritycontrol of Immoeast and abolish potential conflict of interests. Itwill establish a consolidated shareholder base, substantially boostliquidity of Immofinanz shares, net intra-group liabilities andreceivables, improve transparency also within corporate governance,better facilitate future capital moves, and save costs and realizesynergies.

AllanSaundersonis a managing editor of Property FinanceEurope and a contributor to GlobeSt.com.

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