Landmark Infrastructure, DigitalBridge: $1.1bn Merger Process In-Depth

Landmark Infrastructure Partners (NASDAQ: LMRK) released its Preliminary Proxy Statement (PREM14A) related to its $1.1bn or $16.50 per common share take-private through multiple transactions with Landmark Dividend (following Conflicts Committee approval) and entities of Digital Colony Partners II, the second flagship private equity fund of DigitalBridge Group. To fund the equity portion of this transaction, Digital Colony Partners II has entered into a $510m binding equity commitment letter.

Below we summarize notable events and key takeaways regarding the background and process of DigitalBridge acquiring Landmark Infrastructure Partners through a series of transactions.

Important excerpts from below which update on Dgtl Infra’s prior coverage of the Landmark Infrastructure ‘bidding war’ are the following:

1. Melody Investment Advisors submitted a revised offer of $22.00 per common unit for Landmark Infrastructure Partners, on September 3, 2021. Indeed, this represents a 33% premium to DigitalBridge’s latest offer of $16.50 per common unit, announced on August 23rd
2. Party A, an undisclosed communications infrastructure services provider, made a proposal to purchase only the wireless communications assets of Landmark Infrastructure Partners for a price of $550m

Background of the Transactions – DigitalBridge Acquires Landmark Infrastructure

General Partner – Landmark Dividend Acquisition by DigitalBridge’s Digital Colony

• May 15, 2021: entities of Digital Colony Partners II agree to acquire Landmark Dividend, which owns 13.2% of Landmark Infrastructure Partners’ common units and 100% of the firm’s General Partner interest
• May 17, 2021: DigitalBridge informs the board of directors of the General Partner that it will submit a proposal to acquire all of Landmark Infrastructure Partners’ common units that it does not already own (i.e., 86.8%), for $13.00 per common unit in cash
• June 2, 2021: entities of Digital Colony Partners II close the acquisition of Landmark Dividend. Additionally, DigitalBridge submits its proposal to acquire the remaining 86.8% of Landmark Infrastructure Partners for $13.00 per common unit

As part of the transaction description below, Landmark and DigitalBridge’s representatives included the following:

• Landmark Dividend (General Partner) / Conflicts Committee: financial advisor was Evercore. Additionally, Landmark Dividend’s legal advisors were Gibson, Dunn & Crutcher and Potter Anderson & Corroon (Delaware)
• DigitalBridge: financial advisor was TAP Advisors. Additionally, DigitalBridge’s legal advisor was Simpson Thacher & Bartlett

Common Units – Landmark Infrastructure Partners’ Proposals from DigitalBridge and Verde

• June 15, 2021: Landmark Dividend establishes and delegates authority to a Conflicts Committee to evaluate, negotiate, and recommend DigitalBridge’s $13.00 per common unit proposal to acquire the remaining 86.8% of Landmark Infrastructure Partners. Importantly, no authorization is given to the Conflicts Committee to solicit any alternative transactions or consider third-party proposals to acquire Landmark Infrastructure Partners or its assets
• July 1, 2021: Conflicts Committee reviews a business plan prepared by Landmark Dividend. This business plan includes preliminary financial projections for Landmark Infrastructure Partners. Specifically, the Conflicts Committee’s review relates to DigitalBridge’s proposal for Landmark Infrastructure Partners’ common units
• July 16, 2021: Verde Investments submits a written letter to Steven Sonnenstein, Chairman of the Board of the General Partner. This letter proposes acquiring all of Landmark Infrastructure Partners’ common units for $13.50 per common unit in cash. Notably, at this time, Verde Investments held an 8.2% ownership stake in Landmark Infrastructure Partners’ common units
• July 19, 2021: DigitalBridge confirms that it is not considering the sale of Landmark Infrastructure Partners to any third parties. Moreover, DigitalBridge notes that the Conflicts Committee does not have authorization to engage with Verde Investments
• Late July and Early August 2021: Conflicts Committee meets with Gibson Dunn and Evercore. The parties discuss materials prepared by Evercore evaluating DigitalBridge’s proposal for Landmark Infrastructure Partners’ common units
• August 2, 2021: Conflicts Committee members agree to make a counterproposal of $16.50 per common unit in cash. Subsequently, on the following day, Evercore delivers the $16.50 per common unit counterproposal orally to DigitalBridge’s financial advisor, TAP Advisors

Common Units – Landmark Infrastructure Partners’ Proposals from Melody and Party A

• August 3, 2021: Melody Investment Advisors delivers to the Partnership GP a letter proposing the purchase by Melody of 100% of the assets owned by Landmark Infrastructure Partners for $16.25 per common unit in cash
• August 5, 2021: Simpson Thacher, on DigitalBridge’s behalf, denies the Conflicts Committee the ability to evaluate Melody Investment Advisors’ proposal. Furthermore, DigitalBridge reiterates it is not interested in selling Landmark Infrastructure Partners or its assets to any third-party
• August 8, 2021: Evercore and Gibson Dunn deliver oral responses to TAP Advisors and Simpson Thacher, respectively, that the Conflicts Committee reaffirms its counterproposal of $16.50 per common unit in cash
• August 13, 2021: Party A, a company that provides communications infrastructure services, submits a letter addressed to the Conflicts Committee. Specifically, this letter proposes the purchase by Party A of 100% of the wireless communications assets of Landmark Infrastructure Partners for a price of $550m
• August 16, 2021: Simpson Thacher reiterates DigitalBridge’s prior position and stipulates that it will not consider Party A’s offer

Common Units – Landmark Infrastructure Partners’ Acquisition by DigitalBridge

• August 13, 2021: Simpson Thacher sends an initial draft of the Transaction Agreement to Gibson Dunn. This document reflects a merger consideration of $16.50 per common unit in cash
• Mid-August 2021: Gibson Dunn and Simpson Thacher exchange drafts of the Transaction Agreement. Additionally, both legal advisors negotiate the Equity Commitment Letter, Debt Commitment Letter, and related documentation
• August 21, 2021: execution of the Transaction Agreement, Equity Commitment Letter, and Debt Commitment Letter occurs
• August 23, 2021: Landmark Infrastructure Partners issues a press release announcing the execution of the Transaction Agreement

Common Units – Landmark Infrastructure Partners’ Revised Proposal from Melody

• September 3, 2021: Melody Investment Advisors sends a letter addressed to the Conflicts Committee. This letter presents a proposal to acquire all assets of Landmark Infrastructure Partners for $22.00 per common unit in cash

DigitalBridge and Landmark Dividend – Assessment of Melody’s Proposal

Landmark Dividend notes that Melody Investment Advisors is a direct competitor to Landmark Infrastructure Partners. Moreover, Landmark Dividend reiterates that it is not evaluating any third-party offers for Landmark Infrastructure Partners.

If a vote of Landmark Infrastructure Partners’ unitholders on DigitalBridge’s offer of $16.50 per common unit is not successful, then Landmark Dividend intends for Landmark Infrastructure Partners to continue as a publicly-traded limited partnership. Once again, DigitalBridge is exerting its rights to retain control of Landmark Infrastructure Partners, in light of a financially superior proposal from Melody Investment Advisors.

Merger Process In-Depth – Read More

Want to read more from our “Merger Process In-Depth” series? Check-out our coverage on the merger processes for Digital Colony’s take-private of Boingo Wireless, Cyxtera’s combination with Starboard Value, and Blackstone’s $10bn deal for QTS Realty.