A Chicago-based real estate investment trust is acquiring Holmdel-based Monmouth Real Estate Investment Corp. for $3.4 billion under a definitive merger agreement, the two announced this week.
Equity Commonwealth will transition into the industrial real estate sector under the all-stock deal for the New Jersey REIT, which will create a company with equity market capitalization of approximately $5.5 billion.
Under terms of the transaction, Monmouth shareholders would receive 0.67 shares of Equity Commonwealth stock for every share of Monmouth they own, a value of approximately $19.40 per share based on the Tuesday closing price. The agreement includes one remaining dividend of 18 cents per share, bringing the total consideration to $19.58 per share, according to a news release.
“Following a strategic alternatives process, our board unanimously determined that the merger with Equity Commonwealth is the best outcome to maximize value for Monmouth stockholders,” CEO and President Michael P. Landy said in a prepared statement. “Our stockholders will benefit from Equity Commonwealth’s preeminent leadership team, which has an exceptional track record of delivering shareholder value, its strong balance sheet, and its focused strategy to build on Monmouth’s over 50 years of success creating a market-leading industrial REIT.”
After the deal is completed, Equity shareholders are expected to own approximately 65% of the combined company, with Monmouth shareholders owning approximately 35%. Two members of the reconstituted Equity Commonwealth board will be chosen by Monmouth’s board.
Monmouth owns 120 properties totaling 24.5 million square feet in its portfolio, as well as six properties totaling 1.8 million square feet under contract.
The transaction is expected to close in the second half of the year, subject to customary conditions and approvals.
J.P. Morgan Securities LLC and CS Capital Advisors LLC are acting as Monmouth’s financial advisers, while Stroock & Stroock & Lavan LLP is serving as its legal adviser. Goldman Sachs & Co. LLC is acting as financial adviser to Equity, while Fried, Frank, Harris, Shriver and Jacobson LLP is serving as legal adviser.