As noted HERE, MNR failed to win the requisite shareholder vote in support of the pending merger with EQC, resulting in the termination of the transaction. As we noted earlier, a termination would likely be near-term BULLISH for EQC (up just under ~1% today), ending a sub-optimal and unpopular execution for shareholders (vs. the Landy family who was set to benefit from tax protection) and also paying EQC terminations fees/expenses. The question now turns to what to do with both stocks? On the EQC side, we think the stock will likely remain in the penalty box over the intermediate term, as shareholder patience for a transaction has worn thin and this process has definitely raised concerns. There is no identifiable catalyst or story to evaluate until EQC finds another acquisition target. On the MNR side, we believe it is likely that the Board ultimately approves the net $19.20/share all-cash offer from Starwood Capital, or perhaps re-opens the bidding process given the level of interest from multiple parties. But with the stock closing just under $19/share today (+1.2% upside to Starwood's offer), unfortunately there is not much juice left to be squeezed and the risk-reward just isn't there, unless another bidder enters the fray. We think it makes sense to wait until there are additional indications from the Board on which path they intend to take.
Please call or e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
Cell:
