Workspace to buy McKay Securities in £272m deal

Office space provider Workspace has agreed to buy commercial property investment company McKay Securities for £272m.

Under the terms of the deal, each McKay shareholder will receive 209p per share and 0.115 new Workspace shares.

The prices represents a premium of around 36.2% to the McKay closing share price on Tuesday.

Workspace said there is a "strong" strategic, operational and financial rationale for the acquisition, providing "a highly attractive investment case". The deal will make Workspace a larger and more resilient company with enhanced income and capital growth prospects and gross property assets of £2.9bn, it said.

It is expected to be earnings accretive from year two and the Workspace board believes it will enhance earnings and dividend growth over the medium term.

Workspace chief executive Graham Clemett said: "The market for office space is shifting, with businesses prioritising greater flexibility and the right location for their teams. This acquisition is a fantastic opportunity to accelerate our growth plans by capturing more of the strong demand we are seeing for our flexible offer in London, whilst selectively extending our reach into attractive commercial locations in the South-East.

"We will be a larger, more resilient company with an enhanced financial profile, and by applying our proven operational model and expertise, we expect to generate strong returns from McKay's portfolio of high-quality assets over the medium term."]

At 1050 GMT, McKay shares were up 29% at 286.50p.