ARCP Seeks Stockholder Vote on Cole Offer

NEW YORK CITY-American Realty Capital Properties on Tuesday said it would increase the cash portion of its offer to buy Cole Credit Property Trust III to 60%, while calling for the matter to be submitted to a vote by CCPT III's shareholders. In a release, the CCPT III board said Wednesday it had received the ARCP letter, under the signature of chairman and CEO Nicholas Schorsch, and would consider it along with ARCP's previous offer.

We attempted repeatedly to engage you to discuss a further refinement to our original proposal,” Schorsch wrote in Tuesday's letter. “Inasmuch as we were unable to do so, we are again forced to disclose the terms of our revised offer publicly.”

Following discussions with CCPT III stockholders and the broker-dealer community, “we have decided to increase the surety of consideration to be paid to CCPT III stockholders,” Schorsch wrote. “While your stockholders would continue to be able to receive either (i) $13.59 (floor/ no cap) in ARCP common stock for each CCPT III share post-internalization or (ii) $12.50 in cash, we are increasing the cash component to a maximum of 60% of outstanding shares of CCPT III post-internalization. As a result, ARCP's stockholders would retain an approximate 60% ownership in the combined company.”

On March 27, Schorsch wrote that ARCP would increase its offer for CCPT III to at least $13.59 per share, or $9.7 billion including the assumption of debt. The revised proposal contemplates acquiring the Phoenix-based CCPT III “as a merged entity” after the close of its acquisition of Cole.

A combined CCPT III and Cole Holdings would be worth at least $6.7 billion in equity, according to Schorsch's letter. “This equity value assumes 492 million shares of CCPT III common stock outstanding, consisting of 481.3 million shares of CCPT III common stock outstanding as of the date of the merger agreement, plus 10.7 million shares of CCPT III common stock to be issued to Cole Holdings in connection with the internalization, each purchased at $13.59 per share,” Schorsch wrote.

ARCP first made an unsolicited bid for CCPT III two weeks ago, a move that would create the largest publicly traded REIT in the net lease sector. CCPT III's board has since reaffirmed its decision to go ahead with a planned acquisition of Cole Holdings.