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SCOTTSDALE, AZ-Local sale-leaseback REIT Spirit Finance Corp. has entered into a definitive merger agreement with a consortium consisting of Australia's Macquarie Bank Ltd., Kaupthing Bank HF of Iceland and other independent equity partners. The closing will take place by the end of the third quarter.

The consortium plans to acquire all outstanding shares of Spirit Finance's common stock for $14.50 per share in cash in a transaction valued at $3.5 billion. The deal includes the assumption of $1.9 billion in debt.

The consortium also has agreed to purchase 6.15 million just-issued shares of common stock for $12.99 per share. Spirit Finance will use the proceeds to fund real estate-related activities in the ordinary course of its sale-leaseback business.

A source close to Macquarie tells GlobeSt.com that Spirit Finance proved to be an attractive acquisition because of the capable management and diversified portfolio. He adds that the business will "operate, look and feel as usual" and that existing management will be retained.

Under the agreement, Spirit Finance can solicit proposals from other interested buyers through April 9. According to yesterday's press release, it plans to do so with help from its financial advisers, Citigroup Corporate & Investment Banking and Wachovia Securities. Kutak Rock LLP is its legal counsel and Venable LLP is its Maryland counsel. The Macquarie source would not speculate on potential other suitors.

Spirit Finance didn't return telephone calls by press time. In the release, board chairman Morton H. Fleischer says the board unanimously approved the acquisition, recommending stockholders do the same. "We are pleased that the offer provides immediate, certain and compelling value and we look forward to working with the consortium to quickly complete the transaction," Fleischer says.

In addition, Spirit Finance president and CEO Christopher H. Volk points to Macquarie's proven long-term investment track record and reputation for securing capital access as incentive to close the deal. "We are also pleased that the consortium has committed to making an equity investment in Spirit at this time by purchasing newly issued shares in the company," he adds. "This investment will fund our continued growth and is a significant vote of confidence in our strategic plan."

For the consortium, Macquarie Securities [USA] Inc. and Kaupthing Securities Inc. are the financial advisers. Latham & Watkins LLP is its legal adviser. The consortium's debt financing will come from Credit Suisse First Boston.

Spirit Finance acquires, manages and finances single-tenant assets in the retail, service and distribution sectors. Its core markets include freestanding automotive dealerships, parts and service facilities, drugstores, educational facilities, movie theaters, restaurants and supermarkets.

Instant Insights /

Consortium Planning $3.5B Spirit Buy-Out

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