ARC’s Global Net Lease to Acquire American Realty Capital Global Trust II
The board of American Realty Capital Global Trust II Inc., a publicly registered non-traded REIT sponsored by AR Global – the successor business to AR Capital, unanimously approved a definitive agreement to merge with AR Global’s public REIT, Global Net Lease Inc. (NYSE: GNL). Speculation on the potential merger has been swirling since April when unnamed sources confirmed the deal.
The resulting single-tenant net lease REIT will have a pro forma enterprise value of $3.3 billion and will own a combined 345 properties in 7 countries. It will retain the Global Net Lease name, trade on the New York Stock Exchange under the ticker symbol “GNL,” and continue to be led by GNL’s current management team. The transaction is expected to close in the fourth quarter of 2016.
“We are confident that this transaction is in the best interest of all,” said Lee Elman, lead independent director of Global II. “Global II’s disciplined investment philosophy of acquiring high-quality, income producing properties, long term net-leased to creditworthy tenants, was our foundation, and GNL’s portfolio is highly complementary to this strategy. And the upside potential of owning GNL is significant. GNL is a global company with a strong and flexible capital structure, access to global capital markets, and a low cost of capital.”
The acquisition of Global II, valued at $647.9 million, includes a fixed exchange ratio of 2.27 GNL shares for each share of Global II common stock owned, providing Global II shareholders with a per share dividend of $1.61 once the transaction closes. Based on GNL’s August 5, 2016, closing price of $8.63, each Global II share would be exchanged for $19.59 of GNL stock. The company said that the fixed exchange ratio allows Global II shareholders, who originally paid $25.00 per share, the opportunity to participate in share price movement, including any upside in GNL’s stock going forward.
The company said that the merger creates a number of significant benefits for Global II shareholders by achieving critical scale, saving an estimated $6.1 million in fees and duplicative corporate G&A, increasing tenant diversification, building a strong tenant base, extending average lease term and improving dividend coverage.
A 45-day “Go Shop” period will allow third parties the opportunity to submit a superior offer.
Upon close of the transaction, the combined company will immediately list the newly issued common shares on the NYSE. GNL will assume or repay $424.3 million in existing indebtedness (net of $23.4 million cash and equivalents), representing an enterprise value of $647.9 million.
The combined company will have a 5-member board of directors, four of whom will be independent. Of these, one will be a newly appointed independent director initially designated by Global II.
The merger is subject to a vote by Global II and GNL shareholders.
