H&R REIT (TSX:HR.UN) and H&R Finance Trust entered into definitive agreement to acquire Primaris Retail Real Estate Investment Trust (TSX:PMZ.UN) from KingSett Real Estate Growth LP No. 5, a fund of KingSett Capital Inc., Ontario Pension Board, Credit Suisse and others for CAD 2.7 billion on January 16, 2013. Under the terms of agreement, H&R will acquire Primaris for a combination of cash and H&R stapled units. Shareholders of Primaris will be entitled to elect to receive 1.13 stapled units of H&R, substantially all of which would be received on a tax-deferred basis or CAD 28 cash per unit, subject to a maximum cash amount of CAD 700 million. If the maximum cash is elected, it will represent approximately 25% of the total consideration. In the event that Primaris unit holders elect more cash than is available, the cash consideration will be prorated among those unit holders electing cash, with the balance of the consideration being settled in H&R stapled units on the basis of the 1.166 exchange ratio. Before closing, holders of Primaris convertible debentures will be entitled to convert their debentures in accordance with their terms and participate in the arrangement on the same basis as other unit holders.

H&R is entitled to CAD 106.6 million break fees in certain circumstances, including the acceptance by Primaris of an unsolicited superior proposal from a third party. The break fee is structured as a cash payment of CAD 70 million and an option to acquire Dufferin Mall and certain Yonge Street from Primaris, priced at an aggregate CAD 36.6 million. The transaction is subject to the approval of 66.6% Primaris units voted at a special meeting of Primaris unit holders and a 50.1% majority of H&R units voted at a special meeting of H&R unit holders. The deal is also subject to obtaining conditional approval to the listing of the H&R REIT Units and the H&R Finance Trust Units, regulatory approvals, including the Competition Act of Canada, court approvals, lender consents, dissenters' rights limited and other customary closing conditions. The transaction has been unanimously approved by the Boards of Trustees of Primaris and H&R and they recommend unit holders to vote in favor of the transaction. The Board of Trustees of Primaris appointed an independent committee for the transaction. Trustees and senior executive management of Primaris have agreed to support the transaction by voting their units in favor of the transaction. The transaction is expected to close by late March 2013. The transaction is expected to be accretive to FFO.

As on February 5, 2013, the terms of the transaction were amended. Under the new terms of agreement, H&R will acquire Primaris for a cash election of CAD 28 per Primaris unit (with total cash consideration of CAD 1.28 billion increased from CAD 700 million); or a unit election of 1.166 H&R Units per Primaris unit for a total deal value of CAD 2.8 billion. H&R will pay restricted unit holder of Primaris new restricted unit at a exchange ration of 1.166. H&R will pay restricted option holder of Primaris new restricted unit at a exchange ration of 1.166.

As on March 19, 2013, some changes were made in the agreement. H&R REIT will now acquire St. Albert Centre which previously was sold by Primaris subsidiary to KS Acquisition II LP, certain amendments were also made. The changes will not affect the consideration payable to Primaris.

As of March 22, 2013, unit holders approved the transaction. Court of Queen's Bench of Alberta has also approved the transaction. The transaction is now expected to close on or about April 4, 2013.

Canaccord Genuity acted as financial advisor and fairness opinion provider and Evercore Partners acted as financial advisor while Graham Gow and Robert Hansen, Jonathan Bitran, Oliver Borgers, Abraham Costin, Tzen-Yi Goh, Donald Houston, Robb Macpherson, Leslie Milroy, James Morand, Stefanie Morand, Emily Ng, Jennifer Organ, Carolyn Ruby, Deandra Schubert, Victoria Seth, Sean Smyth and Jerald Wortsman of McCarthy Tétrault LLP acted as legal advisors for the independent committee of Primaris. Frank DeLuca of Cassels Brock & Blackwell LLP acted as legal advisor for Primaris. Michael Gans and Markus Viirland of Blake, Cassels & Graydon LLP acted as legal advisor for H&R. Peter Block and Jennifer Lee of National Public Relations acted as public relations advisors in the transaction. TD Securities Inc. acted as financial advisor and Bennett Jones LLP and Osler, Hoskin & Harcourt LLP acted as legal advisors to KingSett. CIBC World Markets, Inc. acted as financial advisor for Primaris Retail Real Estate Investment Trust. CIBC Mellon Trust Company acted as depositary to Primaris. Kingsdale is acting as information agent for Primaris for a fee of CAD 0.25 million. Davies Ward Phillips & Vineberg LLP acted as the legal advisor to H&R REIT.