American Realty Capital Properties Inc. (ARCP) and Cole Real Estate Investments Inc. have signed a definitive agreement to merge the two companies – creating the largest net-lease real estate investment trust (REIT) in the world, with an enterprise value of $21.5 billion.
According to the companies, ARCP has acquired Cole for $11.2 billion, making a combined portfolio of over 100 million square feet of 3,700 properties in 49 states and Puerto Rico.
Under the terms of the agreement, Cole will merge with and into a wholly owned subsidiary of ARCP. Cole stockholders may elect to receive 1.0929 shares of ARCP common stock (reflecting a fixed exchange ratio) or $13.82 cash for each share of Cole common stock, subject to 20% proration.Â
According to the companies, ARCP's offer is valued at $14.59 per Cole common share, based on the fixed exchange ratio of 1.0929 shares and ARCP's closing price of $13.35 on Oct. 22. ARCP will increase its annualized dividend by $0.06 (from $0.94 to $1.00 per share) upon the close of the merger.
The transaction is expected to close in the first half of next year, and ARCP has secured $2.75 billion of fully committed financing from Barclays. The merger agreement has been unanimously approved by the board of directors of each company and is subject to customary closing conditions, including stockholder votes by both companies.
ARCP expects approximately $70 million of combined expense synergies and expense savings in the first year of the merger – mainly through reduction and elimination of duplicate overhead costs and other non-essential expenses.
Further, in connection with the closing of the merger, two of Cole's existing independent directors will become additional independent directors of ARCP, subject to approval by ARCP's current board.