LNR PROPERTY GROUP, A REAL ESTATE AND investment company spun off from Lennar Corp. seven years ago, announced it was accepting a bid from Cerberus Capital Management to buy all of its shares. The deal, valued at $3.8 billion including equity and debt, would result in the publicly traded LNR becoming a private company. LNR will stay in Miami Beach, keep its corporate name, and retain its management team. The deal, announced in August, is to be completed late this year or early in 2005.
LNR chairman Stuart Miller said that going private would give the company more flexibility to carry debt and pursue aggressive deals, freeing it from the obligation to please the market every quarter.
A new holding company called Riley Property Holdings will own LNR. Miller is exchanging his LNR shares for a 20.4 percent stake in Riley Property Holdings. Shares controlled by Miller are now worth more than $600 million.
At least one analyst, Donald Destino, who has followed LNR for three years, thought the price was too low. LNR agreed to sell 100 percent of its shares to the New York-based private investment firm for $63.10 a share. When LNR announced the deal, its price stood at $59.10 a share—providing investors with a 6.8 percent premium—before rising to within pennies of Cerberus' offer following the announcement. At press time in mid-September, the stock price was hovering near $62 a share. “I think the company is conservatively worth at least $70 a share,” Destino, managing director of San Francisco-based JMP Securities, told The Miami Herald.
In early September, Deal.com, a New York-based Web site, reported that there may be rival suitors. The merger agreement precludes LNR from soliciting other proposals, but permits it to consider unsolicited proposals.