Game on: American Realty ups its bid for Cole III

Sweetened bid includes offer of $12.50 per share in cash; no contact as of yet

Mar 27, 2013 @ 4:22 pm

By Dan Jamieson

American Realty Capital Properties Inc. on Wednesday sweetened its bid to take over Cole Credit Property Trust III Inc. The announcement immediately upped the stakes in a testy battle between two of the biggest players in the nontraded-REIT space.

In a letter to the board of the Cole real estate investment trust, Nicholas Schorsch, chief executive of publicly traded American Realty Capital, offered not less than $13.59 per share in stock, or $12.50 in cash, for the REIT. The offers work out to a total value of more than $9.7 billion including the assumption of debt.

American Realty Capital's initial buyout proposal from a week ago was for at least $12 in cash or stock for each Cole share, a valuation of just more than $9 billion.

In its latest offer, ARC said it would also acquire Cole's management company, Cole Holdings Corp., as part of the merger.

Mr. Schorsch said the revised bid is based on more-detailed operating data Cole released Monday in a filing with the Securities and Exchange Commission, as well as in response to Cole's claims that its own proposal to merge Cole Holdings with the Cole REIT could not be averted.

“This offer is a floor of $13.59, and in [Cole's] filing, they already pegged [their proposal] at $13 to $15 … in a best-case scenario” after going public, Mr. Schorsch said in an interview.

In its SEC filing Monday, Cole said the acquisition by the Cole Credit Property Trust of its management company would benefit shareholders of the newly combined entity. Cole also said that the initial proposal from ARC would result in 12% to 25% less for shareholders and result in a new entity with too much leverage.

Those claims “are just crazy,” Mr. Schorsch countered. “We are actually one of the lowest-leveraged REITs.”

A spokesperson for Cole did not have an immediate comment on the revised offer from ARC.

Earlier this month, the Cole REIT, whose client roster includes Home Depot, Wal-Mart and Lowe's, made its offer to buy Cole Holdings, with a plan for the combined entity to go public. The controversial proposal included hefty “internalization” fees paid to Cole Holdings management.

Mr. Schorsch said his new offer to buy Cole Holdings “allows a smooth and seamless transition” because founder “Chris Cole and his management team [are] getting paid.”

He added that total internalization fees paid by Cole REIT shareholders to management would total about $165 million, not including additional fees based on performance.

So far, Cole hasn't responded to American Realty Capital's offers. Mr. Schorsch alluded to the lack of contact in his letter today.

“As you are well-aware, we again reached out to you, Cole Holdings' management and your advisers numerous times over the past few days, to no avail,” he wrote. “We continue to believe that at this point, negotiating in a public forum, although not our preference, is the only path available to us due to your refusal to engage with us privately.”

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Why broker-dealers are on a roll

Deputy editor Bob Hordt and senior columnist Bruce Kelly discuss last year's bounce-back for IBDs.

Latest news & opinion

Top 10 IBDs ranked by revenue

These independent broker dealers generated the most revenues in 2017.

8 podcasts advisers listen to when they aren't working

Listening to podcasts for the fun of it.

UBS continues to cut loans to recruits, while increasing compensation to brokers

The wirehouse reduced recruitment loans 20% and increased bonus loans 68% in the first quarter.

Things are looking up: IBDs soared in 2017

With revenue up, interest rates rising and regulation easing, IBDs are soaring.

SEC advice rule may give RIAs leg up over broker-dealers

Experts say advisers will be able to point to their role as fiduciaries as a differentiator in the advice market.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print