Monmouth Gains After Blackwells Sweetens $1.77B Buyout Offer; BMO Says Hold

Shares of Monmouth Real Estate Investment Corp. closed 4.2% higher on Monday after Blackwells Capital offered to buy the industrial real estate company in a deal valued at $1.77 billion.

Monmouth (MNR) said that Blackwells raised it initial offer of $16.75 per share proposed on Dec. 1 and will now pay $18 per share in cash for each Monmouth outstanding shares.

Monmouth’s board is currently reviewing the revised proposal by the investment management firm. The company said, “The Monmouth board is well advised and regularly considers opportunities to create stockholder value. The Board and management team are confident in Monmouth’s business plan and are excited about the company’s prospects for continued growth and value creation in 2021 and beyond.”

Blackwells’ chief investment officer Jason Aintabi said, “As a public company, Monmouth has significantly underperformed comparable industrial REITs over the last five years, further exacerbated by the stock’s lack of liquidity.” (See MNR stock analysis on TipRanks)

Following the buyout proposal, BMO Capital analyst Frank Lee said, “We view this an attractive valuation,” given MNR’s high leverage. Lee added, “If this is a legitimate cash offer, we view it as attractive, and another positive data point for the Industrial sector.” For now, the analyst, however, maintained a Hold rating and a price target of $16 (9.7% downside potential) on the stock.

Meanwhile, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 3 Buys and 2 Holds. The average price target stands at $17 and implies downside potential of about 4% to current levels. Shares have gained 22.3% year-to-date.

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