Retail REIT Regency Centers Corp. (NYSE:REG) said Nov. 14 it will acquire Equity One, Inc. (NYSE:EQY) in an all-stock deal that values Equity One at approximately $4.6 billion.
The merger of the two shopping center REITs will create a national portfolio of 429 properties spread with more than 57 million square feet of space, the companies said.
“Bringing together these two highly complementary businesses creates a best-in-class platform capable of delivering sustained growth and value creation over the long term,” said Hap Stein, Jr., chairman and CEO of Regency. Stein will serve as chairman and CEO of the combined company.
Under the terms of the agreement, each Equity One share will convert into 0.45 shares of new Regency stock. Based on Regency’s closing price Nov. 14 of $69.86, the transaction values Equity One shares at $31.44. Equity One has approximately 145 million shares outstanding; the company’s share price closed Nov.14 at $27.87.
David Lukes, CEO of Equity One, said shareholders are receiving an “attractive valuation for the company’s assets, and have the opportunity to participate in the future growth prospects of a powerful new company led by a best-in-class management team.”
Chris Lucas, a REIT market analyst at Capital One, said his initial reaction to the deal is “incrementally positive.” He noted that it will significantly increase Regency’s exposure to the key high-barrier-to-entry New York City area “while maintaining a best-in-class balance sheet with an opportunity to improve the long-term debt structure of the combined entities.”
According to Regency, the combined company is expected to have a pro forma equity market capitalization of approximately $11.7 billion and a total market capitalization of $15.6 billion.
The transaction is expected to close during the first six months of 2017. Regency shareholders are expected to own approximately 62 percent of the combined company’s equity, with former Equity One shareholders owning approximately 38 percent.