Home News Releases Kennedy-Wilson Holdings, Inc. and Kennedy Wilson Europe Real Estate Plc Announce Merger

Kennedy-Wilson Holdings, Inc. and Kennedy Wilson Europe Real Estate Plc Announce Merger

Companies to Combine in All-Share Transaction with a Combined Enterprise Value of US$8.2 Billion Enhances Portfolio Diversification with Flexibility to Allocate Capital Across Asset Classes and Geographic Markets Intention to Increase First Quarterly Dividend by 12% After Transaction Close

BEVERLY HILLS, Calif. & LONDON, April 24, 2017–Kennedy-Wilson Holdings, Inc. (NYSE:KW) (“KW”), a global real estate investment company, and Kennedy Wilson Europe Real Estate Plc (LSE:KWE) (“KWE”), an LSE listed property company that invests in direct real estate and real estate loans in Europe, today announced that they have reached agreement on the terms of a recommended all-share combination transaction that will create a leading global real estate investment and asset management platform. As a result of the transaction, KWE will become a wholly owned subsidiary of KW.

The transaction will be effected by means of a court-sanctioned scheme of arrangement under Article 125 of the Jersey Companies Law. Under the terms of the transaction, each KWE shareholder will be entitled to receive 0.667 new KW shares for each KWE share held by it. Based on the US$22.50 closing price of KW shares on April 21, 2017, the last trading day prior to the announcement, and a GBP / USD exchange rate of 1.2779, the implied value per share of KWE is 1,174 pence, which represents a premium of approximately 20.0% to the closing price of 979 pence per KWE share on April 21, 2017 and 22.4% to the volume weighted average closing price of 960 pence per KWE share for the three month period ended April 21, 2017. Based on pro forma ownership, existing KW shareholders will own approximately 64% and former KWE shareholders will own approximately 36% of KW following completion of the transaction.

William J. McMorrow, Chairman and Chief Executive Officer of KW, said, “This transaction represents one of the most significant milestones in our 40-year history. The combination will create a leading global real estate investment and asset management platform with enhanced diversification supported by the continuity of leadership with a strong, proven track record. The enterprise will benefit from greater scale and improved liquidity, which will enhance our ability to generate attractive risk-adjusted returns for our shareholders. The transaction significantly improves our recurring cash flow profile, and, as such, we are pleased to announce our intention to increase our first quarterly dividend by approximately 12% upon completing the transaction, which demonstrates our confidence in the combination and our long-term prospects.”

Charlotte Valeur, Non-Executive Chair of KWE, said, “I and the other independent directors of KWE are very pleased to announce that we have reached agreement on the terms of an all-share transaction between KW and KWE, which will give KWE shareholders the opportunity to gain exposure to a diversified asset base.”

Strategic & Financial Benefits of the Transaction

KW believes that the transaction:

  • Creates a leading real estate investment and asset management platform with increased scale and liquidity, having a combined market capitalization of approximately US$4.0 billion and an enterprise value of approximately US$8.2 billion. Given this increased scale, KW will receive greater weighting in key US stock indices following the completion of the transaction, including the Russell 2000 (in which it is expected to be the fourth largest real estate company by market capitalization) and the Russell 3000, enhancing liquidity in the stock and broadening the potential investor base;
  • Creates a global portfolio of over 400 properties with an enhanced geographic mix and broad diversification across real estate sectors;
  • Provides flexibility to allocate capital globally across asset classes and geographic markets. KW’s approximately 400 employees in the United States and approximately 100 employees in Europe provide the knowledge base to continue to make investment decisions that offer attractive risk-adjusted returns on capital. Additionally, KW’s enhanced scale and profile may result in greater access to capital and an expanded set of acquisition and development opportunities;
  • Establishes a company with a strong pro forma capital structure, with pro forma leverage of approximately 51% net debt to enterprise value, access to diverse, global equity and debt capital sources, and approximately US$1.4 billion of pro forma liquidity (as of December 31, 2016) to support growth;
  • Generates certain synergies resulting from the elimination of duplicative public company costs, and potential additional income arising from KW’s ability to manage capital more efficiently as a result of the combination, which is expected to result in expanded capacity for investment to drive growth; and
  • Will be accretive to adjusted net income per share immediately following the closing and provides the potential to increase cash flows available for shareholder distribution. KW intends to increase its first quarterly dividend by approximately 12% upon completion of the transaction.

Leadership

Since its IPO, KWE has been managed by KW’s leadership team, utilizing KW’s proven platform and systems. Upon the closing of the transaction, there will be no change to leadership or systems, which will enable a seamless integration and should minimize integration risk and disruption to the business. Additionally, KW’s Board and management will own approximately 13% of the shares in the combined company following completion of the transaction, which creates a strong alignment with shareholders.

Closing and Approvals

The transaction is expected to close during the third quarter of 2017, subject to customary closing conditions including, among other things, receipt of KW and KWE shareholder approval.

The KW Board of Directors has unanimously approved the transaction. The KW Board of Directors considers the transaction to be in the best interests of KW and its stockholders and intends to unanimously recommend that KW stockholders vote in favor of the issuance of KW shares in connection with the transaction.

The independent directors of KWE have indicated to KWE shareholders that they intend unanimously to recommend the transaction to KWE shareholders in due course in the formal circular relating to the scheme of arrangement under Jersey law by which the transaction will be implemented.

Advisors

Goldman Sachs is acting as lead financial advisor to KW. BofA Merrill Lynch is serving as financial advisor to KW. Wachtell, Lipton, Rosen & Katz is serving as legal advisor in the US to KW, Macfarlanes LLP is acting as UK legal advisor to KW, and Ogier is acting as Jersey legal advisor to KW.

Rothschild is acting as lead financial adviser to the independent directors of KWE. J.P. Morgan Cazenove is acting as financial adviser to the independent directors of KWE. Sullivan & Cromwell LLP is serving as legal advisor to KWE in the US and UK. Appleby is serving as Jersey legal advisor to KWE.

Conference Call

KW will host a conference call for research analysts and investors to discuss the transaction on April 24, 2017 at 1:30 p.m. (London Time) / 8:30 a.m. (New York Time). The direct dial-in number for the conference call is (866) 610-1072 for US callers, 080 00288438 for UK callers, and +1 (973) 935-2840 for international callers. The conference ID is 12445221. The webcast will be available at: http://event.on24.com/wcc/r/1414749-1/EFCEFA744FBC9C1C6596BC9FB879D24B.

About Kennedy Wilson
Kennedy Wilson (NYSE:KW) is a global real estate investment company. We own, operate, and invest in real estate both on our own and through our investment management platform. We focus on multifamily and commercial properties located in the Western U.S., UK, Ireland, Spain, Italy and Japan. To complement our investment business, the Company also provides real estate services primarily to financial services clients. For further information on Kennedy Wilson, please visit www.kennedywilson.com.

About Kennedy Wilson Europe Real Estate Plc
Kennedy Wilson Europe Real Estate Plc is an LSE listed property company that invests in real estate across the UK, Ireland, Spain and Italy. It aims to generate superior shareholder returns by unlocking value of under-resourced real estate across its target geographies. Its existing portfolio is primarily invested across office and retail in the UK and Ireland, weighted towards London, the South East and Dublin. For further information on Kennedy Wilson Europe Real Estate Plc, please visit www.kennedywilson.eu.