Seeking Alpha

ARCP to buy Cole Real Estate

  • American Realty Capital Properties (ARCP) agrees to buy Cole Real Estate investments (COLE) in a deal valued at $11.2B. The board's of each company have approved the deal and ARCP has already secured $2.75B in financing. Combined, the companies will have an enterprise value of $21.5B.
  • Cole, of course, recently came public after fending off a takeover bid from ARCP when it was a non-traded REIT.
  • Cole owners will have the option of receiving 1.0929 shares of ARCP stock for each share they own, or $13.82 per share in cash. The stock offer is valued at $14.59 per share based on last night's ARCP close of $13.35. Cole last night closed at $12.82, so the offer is a 13.8% premium. The transaction is expected to close in 2014 Q1.
  • ARCP 2014 FFO per share guidance is hiked to $1.13-$1.19 in lieu of the merger. Also among post-merger benefits: The annual dividend will be $1.00 (vs. $0.96 now), $70M of expense synergies, increased institutional coverage and possible inclusion in the S&P 500.
  • COLE +2% to $13.08 premarket.
  • Press release.
Comments (5)
  • PendragonY
    , contributor
    Comments (5451) | Send Message
     
    Hmm, that's kinda schweet. I am long both ARCP and COLE. This will certainly bump up both the value of those positions and the yield!
    23 Oct 2013, 08:47 AM Reply Like
  • tomlos
    , contributor
    Comments (1099) | Send Message
     
    I was looking at jumping into COLE earlier in the summer but wanted to give the dutch tender time to shake out.. This is quite a deal..
    23 Oct 2013, 09:02 AM Reply Like
  • rrl1124
    , contributor
    Comments (68) | Send Message
     
    between the cole, arct 4, recent ge acquisitions, etc I am getting dizzy with arcp. it all seems too fast hocus pocus to me and t4 thinking to bail out when the air clears. in the end what are the projections for bottom line eps or is this not a concern for such a reit??
    23 Oct 2013, 09:26 AM Reply Like
  • Larry10390
    , contributor
    Comment (1) | Send Message
     
    I fail to see how this benefits shareholders. This is dilluting the arch shares at the benefit of management. To big to fast in a rising interest rate environment is dangerous. Why have they not explained to shareholders in detail how this will benefit shareholders. The stock has gone from 18 to 12. Uncertainty breeds failure in this industry. So arch remove the uncertainty. Raise funds to eliminate debt as you are only leveraged 25%. Structure the deal with o% debt and increasing revenue will greatly increase the value to shareholders over time. Hey arcp let your shareholders know what's going on in detail not just what your saving on synergies. That generic answer is bull!
    23 Oct 2013, 03:11 PM Reply Like
  • PendragonY
    , contributor
    Comments (5451) | Send Message
     
    "I fail to see how this benefits shareholders."

     

    So increased AFFO isn't a benefit? And the increase to distributions?
    23 Oct 2013, 04:14 PM Reply Like
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