ARC – Retail Urges Shareholders to Reject Mackenzie Tender Offer
The board of American Realty Capital – Retail Centers of America, a publicly registered non-traded real estate investment trust sponsored by AR Global, is urging shareholders to reject the recent tender offer made by a MacKenzie Capital Management affiliate.
As reported by The DI Wire, Coastal Realty Business Trust is offering to purchase up to 1 million shares of ARC – Retail common stock for $5.50 per share. The offer, which constitutes 1.01 percent of the outstanding shares, expires on January 24, 2017.
ARC – Retail is currently in talks to merge with another AR Global REIT, American Finance Trust, to create a single retail-focused REIT with an enterprise value of approximately $3.9 billion. American Finance Trust plans to acquire all of the outstanding common stock of Retail Centers of America for approximately $1.4 billion, if shareholders approve.
The ARC Retail per share merger consideration has an estimated value of approximately $10.26 per share, based on the exchange ratio and American Finance Trust’s published estimated per share NAV of $24.17 and cash consideration of $0.95 per share. Shares of ARC Retail were originally sold for $10.00 each and have an estimated per share net asset value of $9.00 each.
In a letter to shareholders, the ARC – Retail board unanimously recommended shareholders reject the unsolicited offer and not tender their shares. The company believes that it is not in the shareholders’ best interest, and that these types of third-party unsolicited tender offers are “often an attempt to profit at shareholders’ expense.”
The offer price of $5.50 per share is $3.50 less than the estimated NAV of $9.00 per share, a discount of 39 percent. The offer price is $4.76 less than the estimated merger consideration of $10.26, a 46 percent discount.
In other ARC Retail news, this week, The DI Wire reported that Robert A. Stanger & Co. issued a scathing special report on the proposed merger of American Finance Trust and ARC Retail titled “Bottom of the Ninth – RCA Investors at Bat: Will AFIN and ARC Global “Pitch” the Perfect Game?”
American Realty Capital—Retail Centers of America went effective in March 2011 and closed in September 2014 after raising $973 million in investor equity. The REIT’s portfolio includes 35 properties totaling 7.5 million square feet with an investment cost of $1.2 billion.
