OMERS to buy Oxford Properties for $1.5 billion

The pension plan of Ontario's municipal employees is bidding $1.5 billion in cash to acquire commercial real estate firm Oxford Properties Group.

The Ontario Municipal Employees Retirement System (OMERS) said it will make the $23.75-per-share bid for all of Oxford (TSE:OXG)through BPC Properties Ltd., a related company of OMERS.

The pension plan said the bid price represents a 34 per cent premium over the $17.73 30-day average closing price of Oxford's shares.

"This investment fits with the OMERS strategy to invest in best-of-class assets," Dale Richmond, the pension plan's president and CEO, said in a release.

"We are pleased that BPC Properties is acquiring ownership of a well run company with which we have enjoyed a profitable and close relationship for over a decade. Real estate serves as a hedge against inflation and provides a solid revenue base," Richmond said.

The deal is expected to be completed by the end of October, pending an independent valuation in September.

Oxford has agreed to not solicit competing proposals and to pay a termination fee of $35 million if the deal with OMERS fails.

OMERS currently owns 17 per cent of the outstanding shares of Oxford on a fully diluted basis.

The pension plan is one of the largest in Canada with more than $35 billion in assets. The plan oversees pension services for the more than 1,000 local government employers and 300,000 active and retired members.

Oxford owns interests in office, industrial and retail premises in Canada's major urban markets.

Oxford shares finished at $23.46, up $4.41 on the day.