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Stock News - Acquistion of InnVest REIT

1 September 2016

When a listed company in a stock exchange is to be acquired by another company, the price of the shares of the company to be sold almost always rises while that of the other company often drops. The following case is my experience of a stock - InnVest this year:

InnVest owns 107 hotels across Canada and also holds a 50% interest in Choice Hotels Canada Inc. Its portfolio includes the Hyatt Regency in Vancouver, the Marriott in Ottawa and a partnership stake in Toronto's Fairmont Royal York.

InnVest REIT has been a good choice among stocks listed in Toronto Stock Exchange. It provided an appealing monthly dividend while its asset was solid. I bought some shares in March 2009 for $3.14 and accumulated to more shares which was sold for a profit at $7.29 in October 2010. Later, I rebuilt my holding in InnVest to 1000 shares at an average price of $5.6 in May 2014. InnVest was trading at $5.5 range since.

In May, InnVest received an unsolicited acquisition offer from Bluesky Hotels and Resorts, Inc., a private Canadian company backed up from investors in Hong Kong. The offer was Cdn$7.25 cash for each share and Bluesky would take over all debts. The deal totalled Cdn$2.1 billion. InnVest was trading at a 30-day average price of $5.28. As soon the offer was known to the stock market, the share price rose sharply to over $7. The prices later dipped in the week. Earlier in March, I sold 200 shares of InnVest, as I thought this company was not moving too much. I bought more InnVest shares which were trading around $7 in the following months; I counted on a smooth acquisition as both companies were Canadian and Bluesky offered a 37% premium to the market price in May. InnVest continued to distribute monthly dividends to the very end. At acquisition date, I owned 2300 shares.

In May, the management of InnVest agreed to the deal and in June the shareholders approved it. Near the end of July, the deal was approved by the Albert court. The share price was still being traded at $7. Finally, InnVest announcement the acquisition was to be complete on August 18. Then the share price moved to between $7.1 and $7.2. After the Toronto stock exchange closed on August 18, Bluesky bought every shares of InnVest. The other day, InnVest Reit was delisted from the exchange.

This acquisition did not get much attention from the public except those interested in Canadian equities. Bluesky is a private Canadian company even though its capitals originate from Hong Kong and China. This capital inflow is good for Canada economy, and the hotels of InnVest now link to the hotel networks in Asia. For Bluesky, this investment is viewed a global platform to expand its plan in North America. For myself, I made a modest gain in this stock, though I need to find a stable investment for my stock portfolio.





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