Letko, Brosseau & Associés Inc. (“Letko Brosseau”) exercises control over approximately 2.4% of the outstanding shares of Atrium European Real Estate Limited (“Atrium” or the “ Company ”) and is its second largest shareholder.
On August 2, 2021, the board of directors of Atrium received a proposal from Gazit-Globe Ltd (“Gazit”), majority shareholder of Atrium, to purchase the remaining stake in the Company at a price of 3.35 € per share. Gazit currently owns around 75% of the outstanding share capital.
According to Letko Brosseau’s analysis, the proposed offer significantly undervalues the Company and unduly favors Gazit to the detriment of minority shareholders. The timing for this proposal is opportunistic and comes as the Company begins to emerge from the global COVID-19 pandemic that has forced the closure of its shopping centers for extended periods of time in 2020 and 2021.
We urge Atrium’s board of directors to vote AGAINST this offer.
The proposed price of € 3.35 per share strongly undervalues the Company:
The proposal was submitted in the days following the release of Atrium’s first half 2021 results which highlighted the recent reopening of all of its shopping centers, after a total of 2.7 months of closure during the first half of the year. , as well as a significant recovery in turnover and in-store traffic for tenants in June 2021.
Management expressed further optimism about the Company’s strategic plan which aims to diversify into residential real estate in the main cities of Poland and the Czech Republic. The Company mentioned a project of 4,000 residential units, part of which would become operational as of March 2022. When asked whether the Company was on track to achieve its goal of owning and operating 5,000 housing units by 2025, Liad Barzilai, CEO of Atrium, responded, “We are on the right track. We are in fact confident that we will get there. In fact, we could reach it sooner. ” 3
Letko Brosseau therefore believes that Atrium should continue to create value for ALL of its shareholders.
In order to protect the value of our investment, we intend to vote against the proposed repurchase transaction. We remind the Board of Directors of the Company and its independent committee that it is their duty to take into account the interests of all shareholders in their assessment of the merits of this offer.