MCT-MNACT merger likely to push through with revised trust scheme: analysts

MCT has offered an all-cash option of $1.1949 per unit to MNACT unitholders.

Analysts are seeing a higher chance for the merger of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) to push through after the former offered an all-cash option of $1.1949 per unit to the latter’s unitholders.

The Bank of Singapore and OCBC Investment Research both said the new option offers MNACT unitholders “greater flexibility in choosing to either stay invested in the merged entity or fully realise their investment.”

Whilst the cash-only consideration would reduce the free-float size of the merged entity, it would still be equivalent to or greater than MCT’s, according to CGS-CIMB.

Apart from an all-cash option, MCT will also launch a preferential offering of $2.0039 per unit to raise up to $2.2b, and its sponsor Mapletree Investments Private Limited (MIPL) has also undertaken to subscribe for the maximum preferential offering.

“MIPL’s resultant stake in the enlarged entity Mapletree Pan Asia Commercial Trust could range from 34.75% to 57.09%, highlighting strong alignment of interest with minority unitholders,” the BOS said.

If the merger pushes through, the merged entity would become one of the largest REITs by market capitalisation listed in Asia, BOS and OCBC IR said.

“[We] believe this would help to reduce MNACT’s concentration risks in China and Hong Kong, and significantly bolster its scale and lower its cost of capital,” OCBC IR added.

Overall, analysts see “longer-term strategic benefits” from the merger.