REIT Withdraws Offer to Acquire Cole Credit Property Trust III

American Realty Capital Properties has withdrawn its $9.7 billion proposal, including assumption of debt, to acquire Cole Credit Property Trust III.

The transaction would have paid CCPT III’s stockholders $12.50 per share in cash, or no less than $13.59 per share in ARCP stock. If this sale occurred, it would have created the largest managed publicly traded REIT in the net lease sector.

However, over the past month, both sides could not come to agreeable terms to satisfy all parties involved in the transaction. For example, on March 21, CCPT III rejected an unsolicited takeover bid from ARCP of $5.7 billion, or $12 per share for CCPT III, stating it will maintain its plans to acquire Cole Holdings Corp., a related real estate investment asset management firm.

At this time, ARCP, which is a publicly traded company listed on Nasdaq, said its offer gives CCPT III shareholders immediate liquidity. CCPT III currently is a non-listed company, but would seek a listing on the New York Stock Exchange if its deal with Cole Holdings were to go through.

Almost two weeks later, ARCP increased its offer to $9.7 billion to break up the CCPT III’s possible merger with Cole Holdings Corp.

Despite the higher offer, ARCP said CCPT III continued its insider internalization of Cole Holdings, including its FINRA-regulated securities business. According to ARCP, this transaction went against industry practices, lacked transparency and paid Cole Holdings and its management more than $127 million.

Consequently, Nicholas Schorsch, chairman and CEO of American Realty Capital Properties, said in a press release that the New York-based REIT has to withdraw its latest offer in order to “safeguard its stockholders from any possible economic, legal, reputational or other risks that may arise from the related party internalization, including the numerous pending class action and derivative lawsuits filed.”

“Despite encouragement for this transaction from stockholders of both companies, research analysts, and leaders in the broker-dealer and financial community, CCPT III’s actions make it clear that its directors and management are completely unwilling to explore a transaction with us,” Schorsch added. “Our objectives have been and will remain to grow earnings and build shareholder value. We are focused on continuing to increase value for ARCP’s investors from our highly accretive property acquisition pipeline and other potential, significant strategic combinations.”