Public storage bids for rival in $11 billion unsolicited offer

The deal would have a so-called enterprise value, which includes net debt, of about $15 billion and would mark one of the largest corporate acquisitions yet in 2023. (Newcrest Mining srl.

NCMGY extension -4.96%

said Sunday in the United States it had received a proposed takeover valuing the Australian gold miner at about $17 billion. He had previously rejected another offer from the bidder, Newmont Corp.)

The deal would also help consolidate the fragmented storage market. Public Storage said it owns approximately 9% of self-storage square footage in the United States as of December 31, 2021, making it the largest operator in the country. Collectively, it said the top five self-storage owners in the US owned about 19% of the space, with the remaining 81% held by regional and local operators.

Under the terms of the proposed transaction, shareholders of Life Storage would receive 0.4192 shares of Public Storage stock for each share or unit of Life Storage. This represents a 19% premium based on the volume weighted average prices of the last 20 days of public storage and lifetime storage as of Friday.

Public Storage said it initially expressed interest in buying Life Storage, a real estate investment trust, in a private communication in late December. Life Storage rejected the opening, saying the company was not for sale, Public Storage said.

The public storage then followed up with an offer to buy the company last month, under terms proposed on Sunday. Life Storage responded that the offer is not in the best interests of its shareholders, according to Public Storage.

By publicizing its offer, a move known as a bear hug, Public Storage hopes Life Storage shareholders will put pressure on the company to come to the negotiating table. It’s a proven tactic in mergers and acquisitions that has become rarer lately as market volatility and economic uncertainty erode business activity.

Public Storage, recognizable by its bright orange logo, is a real estate investment trust in Glendale, California that specializes in the development, ownership and management of self-storage units. Founded in 1972, it was one of the first major self-storage companies and today competes with companies including Extra Space Storage Inc.

and CuboSmart.

Public Storage had interests in more than 2,800 self-storage facilities across the United States as of Sept. 30, according to its website. It also owns 35% of the European self-storage company Shurgard Self-Storage SA.

Life Storage was originally a financial planning firm when it was founded in 1982, opening its first self-storage facility in Florida in 1985. The Buffalo, NY-based firm operated under the Uncle Bob’s Self Storage brand until rebranding to Life Storage in 2017, according to its website.

Public Storage Chief Executive Joseph Russell told Life Storage officials that he is looking for a larger real estate portfolio and to reap economies of scale from tenant reinsurance, third-party property management and other areas.

Self-storage stocks in the US have posted big gains since the initial onset of the Covid-19 pandemic, as some Americans have spent time cleaning out their homes and garages while others have packed up and moved to temporary getaways thanks to the new flexibility of working from home . Shares of Public Storage each rose more than $400 in April, while Life Storage peaked at around $151.

More recently, however, stocks have lost some of these gains as many pandemic-era darlings have fallen out of favor with investors. (Shares of Public Storage closed Friday at $308.47.) Shares of both companies are down 15% or more in the past 12 months. Life Storage has a market cap of $9.4 billion, compared to $54.2 billion for Public Storage.

Both companies have been acquisitive lately, albeit on a smaller scale.

Public storage has mostly increased its presence in recent years by acquiring assets. From January through September of last year, the company acquired 44 self-storage facilities in states including Oklahoma, Texas, North Carolina and South Carolina, for a total of $501.9 million, according to the filings.

Life Storage CEO Joseph Saffire has been at the helm of the company since March 2019. In a January presentation to investors, he highlighted how the company has rapidly grown its presence across the US Sunbelt region by purchasing facilities storage in states including Florida, Alabama and Georgia.

Email Lauren Thomas at [email protected]