S&P puts ADO on watch

S&P said it placed ADO Properties SA’s BBB- rating on CreditWatch with negative implications on the company’s plans to acquire Adler Real Estate AG and a 22.2% stake in Consus Real Estate AG.

“The Adler acquisition increases ADO’s scale and diversification, but will weaken its financial metrics,” said S&P in a press release.

ADO’s voluntary public tender offer of the shares of Adler includes an exchange ratio of 0.4164 ADO’s shares per Adler share, representing a premium of about 17.3% to Adler’s closing share price before the announcement of the transaction. S&P said it understands there is no minimum acceptance ratio, ADO intends to acquire 100% of Adler’s share capital, and about 52% of irrevocables have been received by Adler’s shareholders.

ADO will pay cash for its stake in Consus. “We understand that, together with Adler’s current shareholding in Consus, ADO will hold a 25% stake in Consus. ADO also has the right to match any of Consus’ residential development projects worked on together to fuel its growth. In addition, ADO has a call option on a further 51% stake in Consus from its current shareholder Aggregate for an exchange ratio of 0.2390 ADO shares per Consus share, or a premium of 36%, which may be exercised in the next 18 months,” S&P said.

Adler has debt maturing in the next 24 months. S&P estimates the funding needs at €2.5 billion or more.

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