American Realty Capital Properties Inc. yesterday sent a letter to the board of directors of Cole Credit Property Trust III Inc. (CCPT III) offering to acquire 100 percent of the outstanding common stock of CCPT III for at least $12 per share, or $5.7 billion, in cash and stock. The total transaction would be valued at more than $9 billion including assumption of debt.

CCPT III has not yet issued a response to the offer.

The offer comes amid a flurry of activity from both firms.

Two weeks ago, CCPT III announced that it had executed a definitive merger agreement to acquire Cole Holdings Corp. It also said upon completion of the deal, CCPT III would change its name to Cole Real Estate Investments Inc. and will pursue a listing on the New York Stock Exchange.

Earlier this year, another Cole entity, Cole Credit Property Trust II, reached a merger agreement with Spirit Realty Capital Inc. to create a net lease REIT with a pro forma enterprise value of approximately $7.1 billion.

Meanwhile, late last month, American Realty Capital Properties Inc. (ARCP) has closed on its acquisition of American Realty Capital Trust III Inc.

According to American Realty, the fully financed proposal offers CCPT III stockholders:

  • Consideration:$12.00 per share in cash or 0.80 shares of ARCP common stock for each share of CCPT III common stock, with a guarantee that the value of the stock consideration will not be less than $12.00 per share. This offer represents at least a 20 percent premium to the original CCPT III offer price of $10.00 per share.
  • Dividend Increase:An increase of ARCP’s dividend to 93 cents per share upon closing, meaning all CCPT III stockholders who elect stock consideration will receive an equivalent dividend of 74.4 cents per share (93 cents x 0.80), a 15% increase (9.4 cents per share) over CCPT III’s current 65 cents per share dividend.
  • Integration and Operating Synergies:ARCP currently estimates that general and administrative (G&A) savings will be not less than $30 million annually. The majority of CCPT III’s real estate assets are net lease properties similar to ARCP’s existing portfolio, resulting in seamless integration and minimal additional resources or ongoing expense requirements.

ARCP says its offer is designed to provide CCPT III’s stockholders with a tax-free exchange and instant liquidity, as there will be no lockup and all ARCP shares will be immediately tradable on NASDAQ. The offer also provides CCPT III shareholders certainty of execution, timing and value. The cash component of ARCP’s proposal is fully funded by cash on hand and borrowing capacity under ARCP’s existing line of credit.

To view the full text of ARCP’s letter, click here.