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American Realty Capital Trust Sued for Realty Income Deal

American Realty Capital Trust Inc. was sued in New York state court by shareholders over the company’s $1.9 billion acquisition by Realty Income Corp. (O) announced this month.

The Carol L. Possehl Living Trust, a shareholder of New York-based American Realty Capital Trust, filed the lawsuit yesterday in New York State Supreme Court in Manhattan, seeking class-action status, according to documents.

The proposed acquisition price of $12.21 a share, about 2 percent more than American Realty Capital Trust’s closing share price the day before the transaction was announced, is unfair and deprives shareholders of a 6 percent dividend yield on the stock, the trust said in its complaint.

“While ARCT shareholders are losing their equity interests in ARCT for an unfair price, Realty Income is receiving substantial benefits from the proposed acquisition at a bargain- basement price,” the trust said in its complaint.

American Realty Capital Trust is aware of lawsuits that have been filed in Maryland and New York concerning the proposed merger and will respond to the suits “in due course,” the company said in a statement.

“ARCT’s management continues to believe that the proposed merger is in the shareholders’ best interests,” the company said.

Company Spokeswoman

Tere H. Miller, a spokeswoman for Realty Income, didn’t immediately reply to a voice-mail message seeking comment on the lawsuit.

The proposed deal will add 501 properties to Realty Income’s portfolio, bringing its holdings to more than 3,250 buildings, John Case, the Escondido, California-based company’s chief investment officer, said in a statement announcing the deal.

The transaction would increase rental revenue from tenants with higher credit ratings, such as FedEx Corp. and Walgreen Co., and allow Realty Income to diversify by reducing revenue from retail real estate to 77 percent from 86 percent.

The case is the Carol L. Possehl Living Trust v. American Realty Capital Trust Inc. (ARCT), 653300/2012, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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