Monmouth Moves Forward With Equity Commonwealth’s Offer

The Board of Directors for Monmouth Real Estate Investment Corporation has decided to continue with its merger with Equity Commonwealth, following its receipt of an unsolicited bid from Starwood Capital Group. 

Monmouth received the offer from Starwood Capital Group at the beginning of the month, under which Starwood would acquire 100% of the outstanding equity of Monmouth for net cash consideration of $18.88 per Monmouth common share. Monmouth’s common shares closed at $19.10 per share on July 21.

Starwood then amended the purchase price to $19.51 per share. After consulting with its financial and legal advisors and evaluating the terms of Starwood’s offer, Monmouth’s Board determined that the pending transaction with EQC represented the best opportunity to maximize value for Monmouth stockholders. Furthermore, it does not believe Starwood Capital’s amended acquisition proposal would provide a basis for discussions regarding an alternative transaction.

“As a Board, we carefully considered the unsolicited proposal and its amendment, and noted it is less than the proposal previously submitted by Starwood Capital as part of our strategic review process,” said Brian Haimm, Lead Independent Director of Monmouth, said in a prepared statement. “We ran an exhaustive strategic alternatives process, and carefully considered Starwood Capital’s all-cash proposal, among a number of other strategic alternatives. Ultimately, the Board unanimously concluded⁠—and has now unanimously reaffirmed⁠—that the EQC transaction is the best path forward for Monmouth stockholders.”

Michael P. Landy, President and CEO of Monmouth, said that the combined company would have a strong balance sheet, prudent growth strategy and significant real estate expertise under the leadership of Sam Zell and David Helfand.

“The pending transaction offers Monmouth stockholders the opportunity to continue to participate in the fast-growing industrial sector,” he said in prepared remarks.

Starwood put out this statement in response to the news: “This latest decision of the Monmouth board to recommend the EQC stock offer is highly disappointing and we firmly believe it is not in the best interests of all of Monmouth’s shareholders. The enhanced Starwood Capital proposal provides Monmouth shareholders in excess of $100 million of additional value relative to the implied value of the Equity Commonwealth transaction based on EQC’s closing price today of $26.61. We believe Monmouth’s shareholders will express similar disappointment when they are asked to approve the EQC transaction by a vote of two thirds of outstanding shares, and we stand ready to execute our fully financed, fully actionable all-cash offer.”

Monmouth’s board and financial and legal advisors determined that accepting the EQC offer would give Monmouth stockholders the opportunity to participate in the upside potential of the combined company and the anticipated long-term growth of the industrial real estate sector. Investors would also enjoy the benefits of a significantly strengthened balance sheet following the payoff of Monmouth’s Series C Preferred Stock in connection with the merger and broadened access to liquidity in the future.