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PIMCO to Acquire Columbia Property for $3.9B
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PIMCO to Acquire Columbia Property for $3.9B

Real estate investment trust Columbia Property (CXP) has signed an agreement to be acquired by funds managed by Pacific Investment Management Company (PIMCO) for $19.30 per share, or $3.9 billion in cash. After the announcement of the news, the company’s shares gained 15.2%, to close at $19.05 on Tuesday.

The deal includes Columbia’s proportionate share of unconsolidated and consolidated debt. The price represents a 27% premium over Columbia’s closing share price on March 12. The acquisition is the result of a comprehensive strategic review process that Columbia’s Board of Directors undertook following the announcement in the spring.

Headquartered in New York, the company develops, owns, and operates Class-A office buildings in Washington, D.C., Atlanta, San Francisco, and New York.

John Murray, Global Head of Private Commercial Real Estate of PIMCO, said, “We continue to believe that high-quality office buildings in major U.S. cities offer long-term value for our clients and Columbia has assembled a modernized, well-located portfolio of assets that we expect will perform well in the years ahead.”

The acquisition is expected to close by the end of the year. Following the completion of the acquisition, Columbia’s common stock will not be listed on the New York Stock Exchange. (See Columbia stock charts on TipRanks)

Furthermore, shareholders of Columbia will be entitled to the third-quarter dividend of $0.21 per share, which is payable on September 15. Thereafter, the company will not pay additional quarterly dividends until the completion of the transaction.

Following the announcement of the agreement, BMO Capital analyst John Kim downgraded the rating on the stock to a Hold, and lowered his price target from $19.50 to $19.30 (1.3% upside potential).

The analyst views Columbia’s agreement to be acquired by PIMCO for $19.30 as a “fair and favorable outcome,” as the timing and the uncertain impact of work from home, along with the Delta variant have delayed return-to-office plans.

Overall, the stock has a Hold consensus rating, based on four unanimous Holds. The average Columbia Property price target of $18.65 implies 2.1% downside potential. The company’s shares have gained 62.3% over the past year.

According to TipRanks’ Smart Score rating system, Columbia scores a 5 out of 10, suggesting that the stock is likely to perform in line with market averages.

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