San Diego Business Journal

Realty Income Amends Acquisition Deal

Tuesday, January 8, 2013

Realty Income Corp. of Escondido has amended its proposed acquisition of American Realty Capital Trust Inc.. The amended offer adds $55.5 million in cash payments to American Realty stockholders in a deal that was already valued at $2.95 billion.

A statement from the two real estate investment trusts said the companies have amended the original merger agreement, announced in September, which is subject to a vote of both firms’ shareholders on Jan 16. Officials of both companies said the deal will be terminated if it is not approved by shareholders of New York-based American Realty Capital Trust.

The revision calls for Realty Income to pay ARCT stockholders a one-time cash payment of $0.35 per share, in addition to the existing fixed exchange ratio of 0.2874 Realty Income shares for each share of ARCT common stock. The additional cash totals approximately $55.5 million, of which approximately $52.5 million is being funded by Realty Income.

The remaining $3 million is being funded by AR Capital LLC, an entity that includes ARCT CEO and President William M. Kahane and ARCT board Chairman Nicholas S. Schorsch.

On the closing of the transaction, Realty Income also plans to increase the annualized dividend to Realty Income stockholders by approximately $0.35 per share, to an annualized rate of $2.17 per share beginning with the February 2013 distribution.

Realty Income CEO Tom A. Lewis said the amended agreement “represents our best and final offer.”

“By upsizing the increase of the annualized dividend to be paid, assuming the closing of the ARCT acquisition, we believe we have materially addressed the difference in dividend rates and that the interests of ARCT stockholders, as well as Realty Income’s existing stockholders, will be well served,” Lewis said, in the statement.

Since it was announced, the transaction has drawn opposition from some ARCT shareholders, who said the proposed price being paid for the company was insufficient.

— SDBJ Staff Report