Activist Ancora urges Big Yellow to explore a sale; board says all options under review

Mixed · 2Ancora, a US activist investor that owns about 4% of Big Yellow, has urged the self-storage group to explore a sale, and the company's shares rose. 1 2 Mixed · 2City A.M. reported that the FTSE 250 company's shares jumped more than 5% to 844p on Wednesday. The Evening Standard said the stock rallied further and was up another 4% on Thursday. 1 2 Right · 1Ancora told shareholders that Big Yellow is "full of trapped value" and trades at a 39% discount to the value of its assets, despite what it called a "highly resilient business model". 1

Mixed · 2Ancora said a sale would be the "best risk-adjusted outcome for shareholders" and wants the board to solicit interest from "the deep pool of likely strategic and financial acquirers globally". It argued that a deal would likely come at a valuation above Blackstone's earlier approach. 2 1 Centre · 1Ancora also said that, with shares at a five-year low, Big Yellow could divest non-core assets, rebrand or sell Armadillo, and monetise its property development pipeline. It said it plans to "engage constructively" with the company. 2 Right · 1Ancora argued that Big Yellow is more attractive to buyers than its US rivals because it would cost less and gives rare access to high-value London properties. It also said that UK interest rates, slow GDP growth and a weak housing market have hurt demand, but that an improved macroeconomic environment could help the company. 1

Mixed · 2On Thursday Big Yellow confirmed it had met the shareholder and said it is keeping "all options" under review. It said its board and management continue to focus on executing its strategy and are "cognisant of its fiduciary duties". City A.M. said the company declined to comment on Wednesday. 2 1 Centre · 1Big Yellow also said it held discussions with a "small number of parties" in October on a range of options, including a possible sale, before holding talks with one suitor. Those talks ended because the value proposed was "not at a level that reflected the full potential of the company". 2 Mixed · 2Both outlets mention earlier talks with Blackstone. City A.M. said they were terminated after the asset manager submitted an offer, while the Evening Standard said they ended in December because the price was too low. 1 2

Right · 1City A.M. put the story in the context of a wave of UK property takeovers, citing Blackstone's £489m purchase of Warehouse REIT and Prologis's agreed £14bn takeover of Segro. It said Big Yellow has 113 UK sites and that its revenue rose 2% to £209m in the year to March while pre-tax profit fell 38% to £126m. 1 Right · 1Analysts at Peel Hunt said the share price undervalues the business's quality and prospects, but questioned whether a sale would "adequately" boost shareholder value. 1