Landmark Infrastructure Partners (NASDAQ: LMRK), an owner of digital infrastructure assets, has received a financially superior proposal from Melody Investment Advisors, a private equity firm, to purchase 100% of Landmark’s common units for $16.25 per common unit in cash. Notably, Melody’s proposal represents a 25% premium to the $13.00 per common unit offered by insider Digital Colony (part of DigitalBridge) and a 20% premium to the $13.50 per common unit proposed by Verde Investments, a hedge fund.
Melody Investment Advisors – Proposal to Landmark Infrastructure
As two competing private equity firms focused on digital infrastructure, Melody Investment Advisors and Digital Colony (DigitalBridge) are poised to be persistent in their pursuit of Landmark Infrastructure Partners. Uniquely, this pursuit i) concerns a publicly-traded company, ii) involves direct correspondence between members of each private equity firm, and iii) entails a sub-sector of digital infrastructure, namely ground lease aggregators, where both Melody and DigitalBridge have recently been investing.
Melody’s Letter to Landmark Infrastructure Partners LP’s Conflicts Committee
Melody Investment Advisors’ Managing Partner, Omar Jaffrey, wrote a letter to the Chairman of the Board of Landmark Infrastructure Partners LP, Steven Sonnenstein. Importantly, Steven Sonnenstein is also a Senior Managing Director of DigitalBridge, leading the firm’s investments in the digital infrastructure sub-sector of towers. Additionally, Digital Colony appointed Sadiq Malik, a Managing Director at DigitalBridge, as a member of the Landmark Infrastructure Partners LP board.
Through Omar Jaffrey’s letter, Melody notes that both Digital Colony and Verde’s proposals do not “fully value the company’s assets”. Moreover, Melody states that it is “confident that the vast majority of Landmark unitholders who are unaffiliated with Colony would find our proposal compelling”. Finally, the firm requests that Landmark’s Conflicts Committee enter discussions with Melody to “run a fair and open sales process”. In turn, this would “maximize value for Landmark’s unitholders”.
Valuation of Landmark Infrastructure Partners – Comparison
In May 2021, Digital Colony’s $13.00 per common unit offer valued Landmark Infrastructure Partners’ common equity at $331m. Incorporating the company’s net debt, preferred units, and noncontrolling interests of ~$640m, Landmark’s enterprise value equated to $972m.
Based on Melody Investment Advisors’ $16.25 per common unit offer, Landmark Infrastructure Partners’ common equity is being valued at $414m. Additionally, factoring-in the company’s net debt, preferred units, and noncontrolling interests of ~$642m, Landmark’s enterprise value equates to $1.1bn.
Overall, Melody Investment Advisors’ proposal nets Landmark’s common unitholders $82.8m of additional value, as compared to Digital Colony’s prior offer.
Landmark Infrastructure Partners – Q2 2021
On Landmark Infrastructure Partners’ Q2 2021 earnings conference call, the company’s CEO Tim Brazy only discussed DigitalBridge’s proposal. Indeed, Brazy noted that Landmark’s Conflicts Committee “has been reviewing the acquisition proposal” from DigitalBridge. Brazy continues, stating Landmark does not “know how long the process will take or if a transaction will be consummated”. To-date Landmark has not provided any public feedback to either of the proposals from Verde Investments or Melody Investment Advisors.
Relevant Experience – Melody Investment Advisors
Melody Investment Advisors has a team focused on investing in assets such as those owned by Landmark Infrastructure Partners. Specifically, the firm has experience acquiring and managing assets in the digital infrastructure sub-sectors of ground leases and rooftop sites. In addition, Melody has familiarity with acquiring, developing, and managing thousands of macro tower assets.
Basis of Proposal
To-date, Melody Investment Advisors has not had access to any of Landmark Infrastructure Partners’ non-public information to evaluate. However, Melody states that it has followed Landmark since its IPO. In so doing, the firm has reviewed the publicly-available information regarding the company in formulating the basis for its proposal.