Fredericton-based Plazacorp says it will pay $8 per unit in cash or 1.6326 Plazacorp shares for each KEYreit unit in a deal that trumps an earlier, hostile takeover bid of $7.50 per unit by Huntingdon Capital Corp (TSX:HNT).
The cash component of offer from Plazacorp, which owns and develops real estate properties in Atlantic Canada, Quebec and Ontario, is subject to a maximum $59.5 million representing 50 per cent of the price.
Plazcorp will also assume debt, bringing the total value of the transaction to $320 million, KEYreit said.
KEYreit described the Plazacorp deal as "significantly more attractive" than the Huntingdon bid and said it was advising unitholders to take up the new offer.
"We are very pleased with the results of our value maximization process which we believe represents an excellent outcome," KEYreit chairman Donald Biback said of moves taken by the company since Huntingdon first announced its intentions.
On the Toronto Stock Exchange, KEYreit units closed up 25 cents at $7.67 Monday, while Plazcorp stock ended down 20 cents at $4.65 on the TSX Venture Exchange.
Huntingdon increased its bid to $7.50 last week after an earlier offer of $7 had been rejected by KEYreit, which has 226 properties in nine provinces across Canada.
The higher Plazacorp offer is subject to a minimum tender of two thirds of units as well as various regulatory approvals. KEYreit has also agreed to non-solicitation covenants , a right by Plazacorp to match any superior offer and a $5-million break fee payable to Plazacorp under certain circumstances in the event the deal does no go through.
John Bitove, KEYreit's CEO and its largest stakeholder at 16.5 per cent, has entered to tender to the offer.
It is anticipated that units tendered to the Plazacorp offer will be taken up in May.
Meanwhile, in accordance with an order of the Ontario Securities Commission made on March 14, the unitholder rights plan adopted by the KEYreit board on March 8 will be cease traded on March 27, it said.