Landmark Infrastructure Partners (NASDAQ: LMRK) recently disclosed updated Schedule 13D forms showing that Landmark Dividend, which is owned by Digital Colony Partners II, a private equity fund of DigitalBridge Group, is accelerating its purchases of Landmark Infrastructure Partners’ common units in the open market, having now amassed a 19.9% stake in the company.
Recall that in August 2021, Landmark Infrastructure Partners agreed to be acquired by its sponsor, the DigitalBridge-backed Landmark Dividend, for $16.50 per common unit or a $1.1bn enterprise value. At this time, DigitalBridge secured a 13.2% stake in Landmark Infrastructure Partners’ common units. Therefore, DigitalBridge has gained an incremental stake of 6.7% in Landmark Infrastructure through open market purchases.
DigitalBridge’s Open Market Purchases in Landmark Infrastructure
Over the past month, DigitalBridge has been making systematic purchases of Landmark Infrastructure’s common units at weighted average prices below its $16.50 per common unit offer for 100% of the company. As shown below, DigitalBridge has acquired a total of 1.7 million shares at a weighted average price of $16.47, equating to $28.1m in total purchases of Landmark Infrastructure’s common units.
|Date||Shares Purchased||Shares Owned||LMRK Stake||Price*||Transaction Value|
As a result of DigitalBridge’s recent open market purchases of Landmark Infrastructure’s common units, the firm now owns 5.07 million shares, equivalent to a 19.9% stake in the company. Furthermore, as shown in the table above, DigitalBridge has been accelerating its open market purchases during the month of October.
Relative to Market Volume
Landmark Infrastructure Partners is a relatively thinly traded stock, with an average of only ~200k common units, equivalent to ~$3.4m of value, being bought/sold in each trading day. Therefore, DigitalBridge’s recent open market purchases are significant in the context of Landmark Infrastructure’s daily volume.
For example, DigitalBridge’s four most recent purchases of Landmark Infrastructure’s common units have amounted to 80%+ of the total volume traded on each of those days.
Unitholder Vote – Landmark Infrastructure Partners
Holders of at least a majority of Landmark Infrastructure’s common units must vote in favor of DigitalBridge’s $16.50 per common unit proposal in order for it to be approved. Specifically, this vote would take place at a forthcoming unitholder meeting. However, after filing its Preliminary Proxy Statement (PREM14A) in mid-September 2021 and amended Preliminary Proxy Statement (PRER14A) in early October 2021, the unitholder meeting has not yet been scheduled.
Overall, it appears that DigitalBridge (Landmark Dividend) is building-up its stake in Landmark Infrastructure’s common units to control more votes at this future unitholder meeting. Indeed, this would reduce the firm’s reliance on third-party shareholders, voting ‘in favor’, to approve the transaction. For example, Dennis S. Hersch, an advisor to Les Wexner (Victoria’s Secret), owns 6.3% of Landmark Infrastructure’s common units.
Assuming approval by unitholders of DigitalBridge’s proposal, the firm targets closing its acquisition of Landmark Infrastructure Partners in Q4 2021.
Why the Potential Uncertainty?
DigitalBridge’s pursuit of Landmark Infrastructure has been a drawn-out process, which has resulted in a ‘bidding war’. Notably, the firm has had to outbid both Verde Investments and Melody Investment Advisors on prior occasions. To this end, DigitalBridge’s current proposal represents a 27% premium to its original offer of $13.00 per common unit on May 17th.
Moreover, uncertainty remains because Melody Investment Advisors presently has an outstanding offer of $22.00 per common unit for Landmark Infrastructure Partners – which is not being evaluated by Landmark Dividend. Indeed, Melody’s proposal represents a 33% premium to DigitalBridge’s offer of $16.50 per common unit.