Cole Credit Completes Purchase After Spurning Rival Offer

Cole Credit Property Trust III, an owner of more than 900 U.S. properties, completed the purchase of the company that sponsored it after rejecting a $6.7 billion buyout offer from American Realty Capital Properties Inc.

Cole Credit plans to list its shares on the New York Stock Exchange in June, the Phoenix-based company said today in a statement. Cole Holdings manages more than $12 billion of real estate assets for about 160,000 individual investors.

“We are pleased to complete the acquisition of Cole Holdings, which provides our stockholders with additional growth potential and increased access to capital,” Leonard Wood, chairman of the special committee of Cole Credit’s board, said in the statement.

American Realty, based in New York, had called its takeover offer better for shareholders of the real estate investment trust. Cole Credit, in rejecting the rival bid earlier today, said its transaction would provide investors better dividend growth through the added cash flow of new properties, while the public offering would give them flexibility to sell their shares. American Realty on March 27 proposed a modified deal that included Cole Holdings in its purchase offer.

“This is not a great shock to us,” American Realty Chairman and Chief Executive Officer Nicholas Schorsch said in a telephone interview. The company said earlier today that it’s weighing options including taking its offer directly to Cole Credit shareholders.

“We’re going to evaluate everything,” Schorsch said.

Cole Holdings’ sole stockholder is Christopher Cole, who is also chairman and chief executive officer of Cole Credit.

‘Without Merit’

Shareholders of Cole Credit last week asked a Maryland judge to block the transaction with Cole Holdings. The lawsuit claimed that a vote by Cole Credit’s shareholders was required for completion of the deal. Cole Credit said in an e-mailed statement last week that the lawsuit was “without merit.”

American Realty had 146 properties that were 100 percent leased as of Dec. 31, according to the company’s annual report filed with the Securities and Exchange Commission.

American Realty was little changed in New York today, closing at $14.79 a share. The stock has gained 34 percent in the past year.

(Updates with American Realty comment in fifth paragraph.)
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