Â鶹ӳ»­

Caisse des Dépôts (CDC)'s real estate arm Icade has signed a memorandum of understanding with Paris-listed real estate investment trust Silic on the merger of the two companies. The operation - to be carried out in shares - is expected to create France's largest real estate investment trust by market capitalisation and the largest business park owner in France with a portfolio of over EUR 9 bn.

Under the deal, CDC has also agreed to invest EUR 300 mln in Gan Eurocourtage, a subsidiary of Groupama which is the majority shareholder in Silic.

'The new group would become a major player in Greater Paris with significant development potential. It would also benefit from an enhanced listing position and a strong financial structure,' the companies said in a joint statement.

The deal will be carried out on the basis of an exchange ratio of five Icade shares for four Silic shares. It will be implemented in stages, with Phase I involving the acquisition by CDC before the year-end of Groupama's 6.5% stake in Silic in exchange for a direct or indirect holding of about 2.7% of the share capital of Icade. At a later stage Icade will file an offer for the remaining shares of Silic.

The operation - which has already been approved by CDC's and Groupama's boards - is expected to allow the distribution of a full-year 2011 dividend of EUR 3.70 per Icade share.

'This transaction is a unique opportunity to create a major player in Greater Paris,' said Icade's CEO Serge Grzybowski. 'It is part of Icade's strategy of pursuing investment in commercial assets which began in 2009 with the transfer of the housing branch and the acquisition of Compagnie la Lucette.'

Thierry Martel, CEO of Groupama, said: 'The transaction between Silic and Icade is built on very strong industrial rationale and creates value for all the shareholders.' The parties will seek to reach final agreement on the deal as soon as possible, they added.

The move was highly expected in the market as Groupama is required to reduce its exposure to equities to 5% by 2012 in order to comply with Solvency II requirements.

'From an industrial point of view, the operation makes sense for both companies as their business park activities are highly complementary,' commented Henri Quadrelli, an analyst at Société Générale in Paris. 'Icade's portfolio is 47% invested in prime office space and 25% in business parks. An acquisition of Silic would create synergies, and would allow Icade to gain critical mass in this segment.'