Irish commercial property company Yew Grove REIT said it has received a takeover approach from Canada's Slate Office REIT which values it at €177.4m.
Yew Grove invests in office and industrial units and government bodies, multi-nationals and large Irish companies account for most of its rental income.
In a statement, the company said the cash offer, if made, will represent a premium of about 1.7% to Yew Grove's closing share price of €1 on November 15, the last business day before the offer was made.
The board of Yew Grove said it considers the terms of the cash offer to be "fair and reasonable", adding that it was unanimously recommending the company's shareholders to vote in favour of it.
The board also said today that it has approved the payment of an interim dividend of €0.012 per share in cash.
This would bring the total amount to be paid to Yew Grove shareholders, should the offer be made, to €1.029 per Yew Grove share in cash.
The dividend will be made irrespective of whether or not the offer proceeds, the company added.
"This is a transformational opportunity for Slate Office REIT to acquire a portfolio of modern properties underpinned by exceptional quality tenants," said Steve Hodgson, the company's chief executive.
"The proposed acquisition, upon completion, would improve the REIT's portfolio metrics and the durability of our cash flows, generating immediate accretion for unitholders," the CEO said.
"With this initial acquisition in Ireland, we would be well positioned to pursue other attractive growth opportunities across Europe," he added.
"With this initial acquisition in Ireland, we would be well positioned to pursue other attractive growth opportunities across Europe," he added.
Slate said highlights of the deal would include entry into a growing new market below replacement cost, adding that Ireland's pro-business environment, leading GDP growth, strong foreign direct investment and growing, highly educated workforce make it an attractive market in Europe.
Slate's €1.2 billion European platform has offices in London, Dublin, Frankfurt and Luxembourg.
Commenting on today's deal, Davy Stockbrokers said it was an increasingly inevitable course of action for Yew Grove.
Davy said that Yew Grove had made significant efforts to raise equity in the market to build scale but ultimately was unable to do so.
One of the main stumbling blocks to raising equity was the high rate of stamp duty of 7.5% on Irish commercial real estate that had to be absorbed by investors on any acquisition growth.
"Irish REIT legislation also has significant restrictions on growth due to the minimum 85% payout ratio, maximum 50% loan to value and other tax-related restrictions on selling assets and recycling the proceeds," the stockbrokers said.
"The favouring by investors of growth stocks over value stocks has been a further issue. Management was left with no other strategic option," they added.
