Realty Income agreed to acquire American Realty Capital Trust on Thursday, striking a $2.9 billion deal involving hundreds of retail and commercial properties.
As part of the deal, Realty Income will issue $1.9 billion in common stock to American Realty Capital Trust shareholders, repay more than $570 million of the takeover target's outstanding debt and assume about $526 million of other obligations. Realty Income said it would award fractional shares worth $12.21 apiece, slightly above the $11.96 closing price of American Realty shares on Wednesday but far below Realty Income's closing stock price of $42.48.
The deal, Realty Income said Thursday, will shape the combined companies into the 18th largest real estate investment trust in the United States. With the addition of 501 properties, including a broader array of commercial buildings, the company will now have more than 3,250 properties in its arsenal.
“In an industry where size matters, Realty Inc ome has now managed to construct an enterprise that is bigger by an order of magnitude, and financially stronger than any of its competitive set,†William M. Kahane, chief executive of American Realty Capital Trust, said in a statement.
The companies said Thursday that they expected to close the deal in the fourth quarter of 2012 or early 2013. Both companies must first hold a shareholder vote.
Bank of America Merrill Lynch and Wells Fargo Securities were the financial advisers to Realty Income, while Latham & Watkins was the company's legal adviser. Goldman Sachs and Proskauer Rose advised American Realty Capital Trust.
