American Realty Capital Properties Inc. said Wednesday it has made a $9 billion offer—including assumed debt—to buy real estate investment trust (REIT) Cole Credit Property Trust III Inc.
The bid—which, if accepted, would create the largest publicly traded REIT in the net lease sector—comes two weeks after Cole Credit agreed to purchase Cole Holdings Corp., a commercial building manager sponsored by Cole Credit. That agreement called for Cole Credit to make an initial payment of $20 million in cash and 10.7 million shares of its stock in exchange for control of Cole Holdings.
In a letter delivered to the Cole Credit board Tuesday, American Realty asks that Cole Credit choose its bid—which it said promises the REIT’s shareholders "a higher level of consideration delivered sooner and with greater certainty"—over the pending deal with Cole Holdings. (American Realty also notes in the letter that it had expressed its interest to Cole Credit’s board prior to the announcement of the Cole Holdings agreement, but never received a response.)
The American Realty bid would pay Cole Credit shareholders $12 in stock and cash for each share in the target company, for an equity value of $5.7 billion. Including the assumption of debt, the deal value would exceed $9 billion. If combined, American Realty and Cole Credit’s assets would include more than 1,700 properties with more than 400 tenants.
Proskauer Rose and Weil, Gotshal & Manges are advising American Realty on the bid. Proskauer advised American Realty in December on its merger with American Realty Capital Trust III, which created a REIT with a combined enterprise value of $3 billion.
For the Cole Credit bid, Proskauer is fielding a team led by New York–based corporate partner Peter Fass. Corporate partner Daniel Ganitsky and finance partner Andrew Bettwy are also advising, along with finance senior counsel Glen Lim. The associates from the firm working on the matter are Michael Ellis, Leon Volchyok, and Andrea Hwang.
New York M&A partner Michael Aiello is leading a Weil team that also includes M&A partner Matthew Gilroy and associates Sachin Kohli, Megan Pendleton, and Danielle Barnes. In December, Aiello represented American Realty Capital Trust III in its $2.2 billion sale to American Realty.
Sullivan & Cromwell, meanwhile, is advising Cole Holdings, in its role as an external manager to Cole Credit, in connection with the American Realty bid. (According to American Realty’s letter, Cole Holdings would receive a $111 million incentive fee should Cole Credit accept the American Realty bid.) S&C M&A partner Alison Ressler and corporate governance partner Benjamin Weber are working on the matter.
S&C has also been advising Cole Holdings on the tentative agreement announced earlier this month under which it would be purchased by Cole Credit. In connection with that agreement, Cole Credit had turned to a Morris, Manning & Martin team led by corporate partner Lauren Prevost and real estate partner John "Sonny" Morris. A Morris, Manning & Martin spokeswoman did not respond to The Am Law Daily‘s request for information regarding whether the firm is advising Cole Credit on the American Realty bid.
Attorneys at Wachtell, Lipton, Rosen & Katz and Venable advised a special committee of the Cole Credit board on its proposed agreement with Cole Holdings. A Wachtell spokeswoman and a Venable spokesman did not immediately respond to The Am Law Daily‘s requests for comment on whether or not their respective firms are advising the special committee on the American Realty bid.