- Latest property M&A deal
- Shares climb to a premium
- Investors expect a rival bid
Shares in AIM-listed self-storage site operator Lok’n Store Group (LOK:AIM) jumped more than 17% to £11.25 after the firm revealed it had received a cash offer for the whole business from Belgian company Shurgard.
The price tops the offer price of £11.10, a premium of roughly 16% to the previous closing price, suggesting shareholders believe a rival operator could be tempted to make a counterbid.
NO KNOCK-OUT BLOW
While the 16% premium being offered is attractive, it hardly amounts to a knock-out blow for investors in Lok’n Store, which has been rolling out its store footprint steadily over the last three years, building revenue and cash flow as it goes.
In its latest trading update the firm said revenue for the six months to January 2024 was up 4.9% driven by a 4% increase in income per square foot.
New ‘landmark’ stores were opened in Basildon and Kettering, while two more new stores are due to open later this year in Bromborough and Staines, adding a total of more than 210,000 square feet of trading space to the firm’s portfolio.
The self-storage market remains undersupplied, and the firm has two more stores in the pipeline including its biggest site yet, in Barking, and a second store in Eastbourne on the south coast.
Lok n’Store is due to release its interim results for the period to January later this month, so investors will be keen to hear why chairman Andrew Jacobs, who owns 12% of the shares, believes a buyout by Shurgard at what looks like a relatively small premium is in their interests.
EXPERT VIEW
AJ Bell investment director Russ Mould described Shurgard’s bid as being at ‘a measly premium’ given it is significantly less than the 51% average premium seen on UK takeovers last year.
‘Lok’nStore may be a small guy in a big industry but that doesn’t mean investors will accept the first bid that comes along. Don’t be surprised if there is either reluctance from some shareholders to accept the offer or if another party throws their hat into the ring with a better price’, added Mould.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Ian Conway) and the editor (James Crux) own shares in AJ Bell.
