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Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.

ZURICH-Jelmoli Holding, the listed Swiss department-store group that recently split out foreign assets, has reached an agreement with Zurich-based listed peer real estate firm Swiss Prime Site to recommend an SPS exchange offer which has been raised to 8.1 SPS shares for one Jelmoli share from a prior 7.7.

Jelmoli said its board now feels able to recommend the offer to shareholders, including extended protection for Jelmoli employees, and the continuation and development of the House of Brands department store on the Bahnhofstrasse in Zurich at least until end-2010.

But the group added: “Jelmoli intends to work closely with SPS on the subject of financing while retaining the right to withdraw its recommendation if by the time of publication of the offer prospectus it has not obtained satisfactory comfort that the financing of existing financial indebtedness is assured.”

SPS announced on June 2 that it signed a purchase agreement with Pelham Investments, controlled by Georg von Opel, to acquire from Pelham all Jelmoli registered shares representing 29.9% of its capital. SPS late last month announced its intention to make an offer.

On the basis of the closing SPS share price of June 10 of CHF51.95, it translates into a market value of CHF420.80 (€279) per Jelmoli share, a premium of 18% on recent average share prices. This equates to a Jelmoli market value at around CHF1.7bn (€1.12 billion).

Upon completion, remaining Jelmoli shareholders will have a share of 47% in the combined company and participate in the synergy potential. In addition, the combination of both firms will boost free float and increase liquidity. Jelmoli Chairman Christopher Chambers commented: “I am proud to be associated with a transaction which will create one of Europe’s leading real estate companies unprecedented in its scale in Switzerland.” Jelmoli will amend its proposals to the annual general meeting of 16 June, dropping authorisation of a capital increase and adding three new board members.

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