Icelandic investment company FL Group announced on Tuesday an agreement to buy the property holdings of Baugur Group in a deal worth ISK 53.8 billion ($874 million, €597 million).
Baugur, which will become the largest shareholder in FL Group with a 35.9% stake, said selling the property portfolio would allow it to focus on its retail assets.
FL Group has also increased its stake in Landic Property from 2.9% to 39.8%, acquired a 32.3% holding in Fasteignafelag Islands, a 49.7% holding in Thyrping and a 22.7% holding in Eik property company. The group has also acquired holdings in a number of international property funds.
The investments will be financed through issuing new shares at ISK 14.7 per share. The price is lower than the closing price on Monday of ISK 19.25 due to the “the size of the share issue and current market conditions“ according to an FL statement. Shareholders will meet at the Hilton Reykjavik Nordica on December 14th to approve the transaction.
In addition FL Group said it will offer 10 billion ISK worth of new equity to institutional investors at the same price of ISK 14.7 per share. Baugur has said it will sell up to ISK 5 billion of its FL shares if demand requires, which could push the offer to ISK 15 billion.
FL shareholders will also be offered ISK 3 billion worth of shares through a rights issue in proportion to their holdings at the start of the subscription period.
FL Group will therefore increase its share capital by ISK 4,544 million which represents an increase of 49%.
It was also announced on Tuesday that Jon Sigurdsson will replace Hannes Smarason as CEO of FL Group. At 29, the former deputy CEO will be the youngest CEO of a company registered on the OMX Nordic Stock Exchange in Iceland.
As part of the restructuring process, the FL office in Denmark will close with operations moving to the London office.