James Sprow | Blue Vault |
CIM Real Estate Finance Trust Inc. agreed to merge with CIM Income NAV Inc., a fellow nontraded real estate investment trust managed by CIM Group LLC’s affiliates, in a stock-for-stock transaction.
CIM Income shareholders are expected to receive an approximate 10.6% premium for each share of the company’s common stock upon the receipt of 2.574 CIM Real Estate class D shares, valued at approximately $18.53 apiece; 2.510 CIM Real Estate class T shares, valued at roughly $18.07 apiece; 2.508 CIM Real Estate class S shares, worth approximately $18.06 apiece; and 2.622 CIM Real Estate class I shares, worth about $18.88 apiece.
The transaction would result in a pro forma combined company with an aggregate enterprise value of about $6.0 billion.
The proposed merger was negotiated by the special committees composed of disinterested independent directors from both companies.
The board-approved transaction, which is expected to be completed in the fourth quarter, is subject to the approval of CIM Income’s shareholders and certain other closing conditions.
The merger deal is expected to put the combined company in a better position for an IPO, which could occur in 2022, subject to market conditions.
The deal provides that it may be terminated by either party if the merger has not been consummated on or before 11:59 p.m. ET on the outside date of May 30, 2022, and certain other circumstances.
CIM Income may terminate the deal if it opts to accept an alternative superior proposal at any time before it receives shareholder approval for the planned merger with CIM Real Estate. CIM Real Estate may terminate the merger under limited scenarios, including an adverse recommendation change.
CIM Income must make a termination payment of about $14.8 million and up to $2.7 million as reimbursement for CIM Real Estate’s expenses under certain circumstances, including if the merger is not consummated before the outside date or due to a failure to obtain shareholder approval for the deal.
The termination payment payable by CIM Income to CIM Real Estate will be approximately $6.7 million if the merger deal is terminated before the end of the window period end time either by CIM Income in order to accept a superior proposal, or by CIM Real Estate in response to an adverse recommendation change regarding or resulting from a superior proposal.
RBC Capital Markets LLC is financial adviser to the special committee of CIM Real Estate’s board and Sullivan & Cromwell LLP and Venable LLP are its legal advisers. Morris Manning & Martin LLP is the REIT and securities counsel in the transaction.
Jones Lang LaSalle Securities LLC, an affiliate of Jones Lang LaSalle America Inc., is financial adviser to the special committee of CIM Income’s board, while Nelson Mullins Riley & Scarborough LLP is its legal adviser.
Source: S&P Global Market Intelligence
