The agreement comes after more than seven months of jockeying by the two companies as Public Storage pursued Shurgard. The price represents a 39% premium to Shurgard's closing stock price on Friday, July 29, the last day before Public Storage publicly announced its proposal to acquire Shurgard.
The merger will create a company with a combined total market capitalization of approximately $18 billion and with ownership interest in more than 2,100 facilities in 38 states and seven European nations. Ronald Havner Jr., president and CEO of Public Storage, says the new entity will be the largest self-storage company in the world.
Public Storage had sought the deal because, among other reasons, it saw the geographic overlap of its facilities and those of Shurgard as a chance to achieve economies of scale by combining. It expects to realize other savings by reducing duplicate expenses for Yellow Pages and other advertising, management information systems and other back-office functions.
The transaction is subject to customary closing conditions and regulatory approvals and the majority approval of both companies' shareholders. Members of the Hughes family, who collectively own approximately 36% of Public Storage's outstanding shares, have agreed to vote their shares in favor of the transaction, as has Charles K. Barbo, chairman of Shurgard.
Goldman Sachs is serving as exclusive financial adviser to Public Storage and Wachtell, Lipton, Rosen & Katz is serving as its legal counsel. Citigroup Corporate and Investment Banking and Banc of America Securities LLC are serving as financial advisers to Shurgard, with Willkie Farr & Gallagher LLP and Perkins Coie LLP serving as its legal counsel.
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