Update: Cole Credit Property Trust III has rejected the $5.7 billion buyout offer from American Realty Capital Properties (ARCP). Cole said it still intends to buy the company that sponsors it, Cole Holdings Corp. In a statement, American Realty said it was “not only surprised but disappointed” that Cole rejected the bid without “seeking to contact ARCP or better understand its offer in any way.”
NEW YORK CITY — American Realty Capital Properties (NYSE: ARCP) has made an offer to buy Cole Credit Property Trust III for $5.7 billion this week, in a move that would create the largest publicly traded REIT in the net lease sector.
New York-based American Realty, a publicly traded REIT, offered to acquire 100 percent of the outstanding common stock of Cole for at least $12 per share, or $5.7 billion in cash and stock.
The deal is valued at more than $9 billion, with the assumption of debt.
American Realty said it will increase its annual dividend by 2.2 percent to 93 cents if the deal closes, which means that Cole shareholders who select the stock consideration would receive an equivalent dividend of 74.4 cents, a 15 percent increase over Cole's current 65-cent dividend.
Phoenix-based Cole owns 1,000 single-tenant office, retail and industrial properties. Earlier this month, the firm announced it would buy Cole Holdings Corp., a real estate investment management firm that oversees more than $12 billion in assets. Cole also said it would seek a public listing on the New York Stock Exchange soon after.
However, American Realty said it had approached the company regarding a merger before the Cole Holdings takeover was announced. In a letter to Cole's board, Nicholas Schorsch, chairman and chief executive of American Realty said they “were surprised not to have received any response.”
American Realty has asked Cole to withdraw its proposed acquisition of Cole Holdings and consider its proposal, which the company contends is superior.
“We believe our proposal will provide a higher level of consideration delivered sooner and with greater certainty to Cole Credit Property stockholders as compared to the internalization transaction currently contemplated,” Schorsch said in the letter to the board. “We believe our proposal is in the best interests of Cole Credit Property stockholders and is superior to that internalization transaction.”
Schorsch said that if Cole goes through with the merger with Cole Holdings, American Realty would be forced to reconsider its bid and could reduce its offer.
Barclays plc and Realty Capital Securities LLC's RCS Capital are acting as American Realty's financial advisers.
American Realty's stock price closed at $14.66 per share on Wednesday, March 21, up from $11.17 per share one year ago.
— Liz Burlingame