In an all-stock transaction, Equity Commonwealth is set to purchase one of the world’s oldest public equity REITs, Monmouth Real Estate Investment Corp., for roughly $3.4 billion. The transaction is expected to close in the second half of the year, with the buyer also assuming debt.
Under the terms of the definitive merger agreement, Monmouth shareholders are entitled to receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth stock they own, which represents approximately $19.4 per share.
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Monmouth specializes in single tenant, net-leased industrial properties, subject to long-term leases, primarily to investment-grade tenants. The company’s portfolio includes 120 properties spread across 31 states, totaling 24.5 million square feet. The majority of the facilities are Class A buildings located near airports, seaports or transportation hubs.
Upon closing of the acquisition, Equity Commonwealth shareholders are set to own roughly 65 percent of the pro forma company, while Monmouth shareholders are expected to own the remaining 35 percent.
David Helfand, president & CEO of Equity Commonwealth, will continue to lead the company, but the number of trustees on Equity Commonwealth’s board will increase to 10, with two of them designated by Monmouth. Sam Zell, chairman of the Board of Equity Commonwealth, will continue to serve in the same capacity.
In a prepared statement, Monmouth CEO Michael Landy said that the merger was “the best outcome to maximize value” for the company’s stockholders.
Stroock & Stroock & Lavan is serving as legal advisor to Monmouth, while J.P. Morgan Securities and CS Capital Advisors are acting as the company’s financial advisors. Equity Commonwealth chose Goldman Sachs & Co. as financial advisor and Fried, Frank, Harris, Shriver and Jacobson as legal advisor.
This is not the first time Monmouth receives an acquisition offer. In December, Blackwells Capital expressed its intention to acquire the REIT for $18.00 per share in an all-cash deal. The transaction was reportedly valued at about $3.8 billion, including the assumption of debt.
A month later, Monmouth officially rejected Blackwells’ takeover offer and decided to seek other alternatives instead.