Realty Income Corporation to Takeover Spirit Realty Capital in an All-Stock Deal
Posted on 10/31/2023
Realty Income Corporation and Spirit Realty Capital, Inc. announced that the two companies have entered into a definitive merger agreement by which Realty Income will acquire Spirit in an all-stock transaction valued at an enterprise value of approximately US$ 9.3 billion. The leverage-neutral transaction is expected to deliver over 2.5% accretion to Realty Income’s annualized Adjusted Funds from Operations (AFFO) per share. Additionally, no new external capital is expected to be required to finance the transaction. The merger, once completed, will result in an enterprise value of approximately US$ 63 billion for the combined company, enhancing Realty Income’s size, scale, and diversification to expand its runway for future growth.
Under the terms of the merger agreement, Spirit shareholders will receive 0.762 newly-issued Realty Income common shares for each Spirit common share they own. At closing, this will result in Realty Income and Spirit shareholders owning approximately 87% and 13%, respectively, of the combined company. The merger is subject to customary closing conditions, including the approval of Spirit shareholders, and is expected to close during the first quarter of 2024. Additionally, from the date of the merger agreement through the closing of the transaction, Spirit may declare and pay regular, quarterly cash dividends to holders of its common stock and to holders of its preferred stock. No approval of Realty Income shareholders will be required in connection with the merger.
Advisors
Wells Fargo is serving as sole financial advisor and Latham & Watkins is acting as legal advisor to Realty Income.
J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are serving as financial advisors and Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Spirit.
