American Realty Capital Properties has agreed to buy Cole Real Estate Investments for $6.85 billion to add a manager of retail, office and industrial properties to REIT mogul Nicholas Schorsch's growing stable of holdings.
American Realty Capital will pay 1.0929 common shares valued at $14.59 for each Cole share or $13.82 in cash, the companies said in a statement Wednesday. The offer is 14% higher than Cole's closing price yesterday. The merger has been approved by both companies' boards, according to the statement.
“Far more can be accomplished by these two great companies working together than either one could have hoped to achieve independently,” Mr. Schorsch, American Realty Capital chief executive, said in the statement. "This merger represents a new beginning for former competitors, and we look forward to uniting two of the industry's most talented organizations."
American Realty Capital said it had lined up $2.75 billion of financing and the deal is expected to be completed early next year.
In a statement, Mr. Schorsch further downplayed the rivalry between ARCP and Cole.
"We share the same disciplined investment philosophy and investment processes, which are focused on investment grade tenancy, long lease durations, a strong diversified tenant base, and a mix of property type and geography. . . By leveraging our successful track records, our complementary businesses and highly skilled professionals, we are confident that we will be well-positioned to achieve continued growth."
Meanwhile, Cole's CEO, Marc Nemer, sought to assure brokers that Cole is in good hands. "Our valued broker-dealer and financial adviser relationships will continue to be served by the same distinguished professionals following completion of the merger," he said in a statement. "As I depart the organization, I do so with the conviction that ARCP will continue to execute on these principles under the umbrella of 'best practices' and generate outsize risk-adjusted returns for all of its stockholders."