Kennedy Wilson Europe surges on news of all-share merger

Kennedy Wilson Europe Real Estate surged after it agreed terms of a recommended all-share merger with Kennedy Wilson Holdings.

Under the terms of the merger, each KWE scheme shareholder will be entitled to receive 0.667 new KW shares for each of their shares.

Based on the closing price of $22.50 per KW share on the latest practicable date and a GBP/USD exchange rate of 1.2779, the terms of the merger value each KWE share at around 1,174p and KWE's entire issued share capital at approximately £1.5bn.

Following completion of the merger, KWE shareholders would own approximately 36% and existing KW shareholders would own approximately 64% of the combined entity.

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 merger 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."

KW said it intends to up the first quarterly dividend payable following the merger by around 12% to $0.19 per KW share. KWE shareholders will be entitled to receive the next quarterly dividend of 12p per KWE share.

At 0927 BST, Kennedy Wilson Europe Real Estate shares were up 13% to 1,110p.