Cominar shareholder hires proxy advisory firm to launch battle against takeover deal

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A major Cominar REIT unitholder is hiring a proxy adviser to launch a battle against a $2.2-billion privatization plan, saying the offer undervalues the Quebec trust’s portfolio of office, industrial and retail properties.

George Armoyan, who held 9.98 per cent of Cominar’s units as of early November, said he is retaining Gryphon Advisors Inc. for a “just say no campaign” to the deal.

Quebec real estate company Canderel and a group of investors have offered Cominar owners $11.75 a unit. That is a 13-per-cent premium to Cominar’s unit price before the deal was announced. But it is below Cominar’s valuation or net asset value of $14.72, according to Mr. Armoyan and other unitholders.

“I am very unhappy with the price,” said Mr. Armoyan, who holds the Cominar stake through his investment firm G2S2 Capital Inc.

In order for the privatization to succeed, it must be put to a vote and win the support from unitholders representing 66.6 per cent of the ballots cast.

“My potential mandate is to bring awareness to unitholders that this is not the right thing to do under the current structure,” Gryphon chief executive officer Dexter John said.

As part of the proposed deal, private-equity firm Blackstone Group will buy Cominar’s industrial properties and Montreal real estate company Groupe Mach will purchase some of the REIT’s retail properties. Their purchase prices have not been disclosed.

Canderel’s consortium includes activist investors FrontFour Capital Group LLC and Sandpiper Group, as well as Artis REIT and Koch Real Estate Investments LLC. That group will acquire the remainder of the portfolio, including office buildings and retail properties in Quebec City, Montreal and Ottawa.

Mr. Armoyan is the largest unitholder to publicly voice displeasure with the deal. Mr. Armoyan said he is 95 per cent certain he will cast his stake against the Canderel proposal.

Last week, Letko, Brosseau & Associates Inc., called the offer unattractive and publicly announced that it will vote no. Letko, an asset manager, said it owns about 3.3 per cent of Cominar.

Together, Mr. Armoyan and Letko control 13.3 per cent of the units. The Canderel consortium and Groupe Mach hold a total of 15.4 per cent.

Asked if the goal was to get the Canderel group to raise the offer price, Gryphon’s Mr. John said: “The desired outcome is for unitholders to be presented with a request that makes financial sense to ensure their support for the transaction’s approval.”

Cominar, which traded as high as $24 a unit about a decade ago, is currently trading around $11.65, which is 10 cents below the privatization proposal.

Cominar did not immediately respond to a request for comment. Canderel had no comment.

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