Griffin Capital Essential Asset REIT Board Recommends Rejection of MacKenzie Tender Offer
January 30, 2019 | James Sprow | Blue Vault
On January 25, 2019, MacKenzie Capital Management, LP commenced an unsolicited offer to purchase up to 1,000,000 shares of common stock of Griffin Capital Essential Asset REIT, Inc. at a price of $7.09 per share in cash.
The board of directors of Griffin Capital Asset Management REIT recommends that shareholders reject the offer by MacKenzie. The board based its opinion on the following:
· The board believes the MacKenzie offer price is significantly less than the current and potential long-term value of the shares. On October 24, 2018, the board approved an estimated value per share of the REIT’s common stock of $10.05. MacKenzie’s offer price is $2.96 per share less than the most recent estimated value per share.
· Given the offer price, the board believes the MacKenzie offer represents an opportunistic attempt by MacKenzie to generate profit by purchasing the shares at a deeply discounted price relative to their current estimated value, thereby depriving the stockholders who tender shares in the MacKenzie offer of the potential opportunity to realize the full long-term value of their investment in the REIT. Specifically, the board notes the following statement in the MacKenzie materials: “The Buyers are making this offer in view of making a profit, so the price offered is below the estimate of value as established by the Buyers…” The board further notes that MacKenzie previously acquired 461,542 of the REIT’s shares via two prior tender offers (of up to 1,000,000 shares) and other means.
· MacKenzie acknowledges it and its affiliates “are not real estate appraisers and the value of the assets may not accurately represent the current or future value of the shares.” MacKenzie further states “No independent person was retained to evaluate or render any opinion with respect to the fairness of the Purchase Price.” The board believes this illustrates the lack of credibility of MacKenzie’s valuation methods and the inadequacy of the offer price.
· The secondary market trade prices quoted by MacKenzie in their offer to purchase are (1) more than the MacKenzie Offer and (2) transacted in a system that typically transacts at values well below net asset value.
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