Sveafastigheter and Klarabo Sverige jointly announce that the boards of directors of Sveafastigheter and Klarabo have adopted a merger plan to combine the companies through a statutory merger in accordance with the Swedish Companies Act with Sveafastigheter as the surviving entity. The Merger, which is based on each company’s long-term net asset value, will be implemented by Sveafastigheter absorbing Klarabo. The shareholders of Klarabo will receive nine new Class A or B shares in Sveafastigheter for every twenty-two Class A or B shares held in Klarabo. Klarabo’s board of directors will, as part of the Merger and in order to achieve an appropriate exchange ratio, propose that an extraordinary general meeting resolves to approve a conditional extraordinary dividend of SEK 1.40 per share, conditional upon the permissions necessary to implement the Merger Plan. The basis for the exchange ratio in the Merger and the adjacent Extraordinary Dividend has been determined in accordance with what is set out below under “Merger consideration”.

In connection with the Merger, Klarabo and SBB i Norden have entered into an agreement pursuant to which Klarabo will acquire a property portfolio from SBB comprising approximately 4,100 apartments in total, of which all properties under management already are managed by Sveafastigheter. The Portfolio Transaction, the Extraordinary Dividend and the Merger are inter-conditional. The Portfolio Transaction, the Extraordinary Dividend and the Merger are together referred to as the “Transaction” and the group resulting from the Transaction is referred to as the “Combined Company”.

Through the Transaction, a scaled residential property platform is created consisting of approximately 26,500 apartments with stronger cash flow profile, broader geographic diversification and an improved credit profile creating pre-requisites for a potential positive rating event and enhancing access to both bank and bond markets at more favourable terms. The Transaction is expected to generate annual cost synergies of at least SEK 120 million. Supported by these factors, a broadened shareholder base, increasing share liquidity and underpinned by an expected stronger profit from property management and dividend capacity per share, these factors together increase the shareholder value of the Combined Company.

Peter Wågström, chairman of the board of directors of Sveafastigheter, comments:

“Through the merger with Klarabo, we are creating a stronger Sveafastigheter with increased scale, broader geographic footprint and thereby a more diversified and resilient property portfolio. The transaction strengthens the company’s financial profile and creates the prerequisites for increased earnings and broader interest from both Swedish and international investors. The board considers this to be a value-creating step for Sveafastigheter and our shareholders.”

Joacim Sjöberg, member of the board of directors of Klarabo, comments:

“Through the merger, a significantly larger real estate company will be created, with approximately 26,500 residential units under management. The increased scale enables more efficient property management and cost savings. It strengthens cash flow generation and creates conditions for increased shareholder value as well as more attractive financing.”

Erik Hävermark, Chief Executive Officer of Sveafastigheter, comments:

“The combined company will have a stronger platform for owning and managing rental apartments with a long-term perspective. The portfolios complement each other well, both geographically and strategically, creating synergies through economies of scale, a higher share of cash flow-generating properties, and an attractive offering of rental apartments in markets with robust underlying demand. We see significant potential to realise operational and financial efficiencies, strengthen access to capital on more attractive terms, and create shareholder value in both the short and long term, while maintaining a clear focus on our tenants.”

Andreas Morfiadakis, Chief Executive Officer of Klarabo, comments:

“For listed companies, achieving sufficient scale in operations is essential. It is therefore very positive to be part of cementing the position for Sweden’s largest listed residential property company. The merger between the companies enables increased income from property management per share through synergies, greater portfolio diversification resulting in lower operational and financial risk, and a more attractive offering to both the equity and credit markets, which over time will support the company’s continued development.”