American Realty Capital Properties Inc. (ARCP) and American Realty Capital Trust IV Inc. (ARCT IV) signed a definitive merger agreement for ARCP to acquire all of the outstanding shares of ARCT IV in a transaction valued at approximately $3.1 billion. The transaction will involve both stock and cash. It has already been approved by the independent directors of both companies, but remains subject to customary closing conditions, including stockholder votes. The deal is expected to close in late third quarter 2013.
According to the terms of the agreement, each outstanding share of ARCT IV will be converted into a right to receive, at the choice of each of its stockholders, either a fixed exchange ratio of 2.05 shares of ARCP common stock, valued at $31.02, or cash payment at ARCP’s option to establish a guaranteed floor value of $30.62 per share. ARCT IV stockholders can also elect to receive $30.00 per share in cash, limited to the consideration paid with respect to 25 percent of ARCT IV shares outstanding. ARCP shares issued to ARCT IV stockholders will be not be subject to any “lockup.”
As a result of this transaction, ARCP has increased its 2014 estimated adjusted funds from operations guidance to $1.19-$1.25 per share, equivalent to approximately 31 percent growth over 2013 estimated AFFO per share at the midpoint of the respective ranges.
“Today’s announced merger solidifies our leadership position in the net lease real estate sector,” said ARCP Chairman and CEO Nicholas S. Schorsch in a statement. “Less than two years after listing ARCP on NASDAQ, subject to completing this acquisition and the Cap Lease merger, together with the recently announced portfolio purchase from GE Capital and other organic acquisitions, we will have increased our enterprise value from $250 million in September 2011 to $10 billion, becoming the second largest net lease REIT.”
As a result of the ARCT IV merger and other recent acquisitions, ARCP will own 2,579 single tenant properties in 48 states in a portfolio that includes 470 tenants across 29 industries.