Public Storage Makes Unsolicited $11 Billion Offer for Rival

(Bloomberg) — Public Storage unveiled an unsolicited $11 billion bid Sunday for Life Storage Inc. in a move aimed at boosting profitability.

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The disclosure comes weeks after Public Storage privately made a proposal to Life Storage. Under the proposed deal, holders of Life Storage shares and units would receive 0.4192 share of Public Storage common stock for each Life Storage share or unit they own, according to a statement Sunday.

The deal values Life Storage at about $11 billion, or $129 a share — about 17% above its closing price of $110.58 on Friday, according to Bloomberg calculations. The Wall Street Journal reported Public Storage’s bid earlier Sunday.

Public Storage said Life Storage wrote Dec. 29 that it wasn’t for sale and reaffirmed that in a Jan. 31 letter.

Life Storage responded in a statement Sunday that the latest proposal appears to be “substantially similar” to the earlier one reviewed by its board. Nevertheless, it said it “will carefully review the proposal and determine the course of action that it believes is in the best interests of all shareholders.”

Dividend increase

Public Storage separately announced on Sunday an increase of its common dividend to $12 a share from $8 on an annualized basis. The bump would sweeten the all-stock offer compared to the private proposal in January, which has the same exchange ratio without the dividend increase.

“We would have preferred to work privately with you to reach an agreement for the benefit of our respective shareholders, but given your refusal to engage meaningfully, we believe making our proposal public is now the most constructive approach,” Public Storage Chief Executive Officer Joe Russell and Chairman Ronald Havner wrote Sunday in a letter to Life Storage’s management.

Public Storage, based in Glendale, California, has grown steadily through acquisitions since the 1990s, with local or regional storage companies accounting for most of those deals.

Previous acquisitions

Of those 47 transactions, the largest was the $4.6 billion purchase of Shurgard Storage Centers LLC completed in 2006, according to data compiled by Bloomberg. Financial terms for most of those deals weren’t disclosed, the data show.

Shares of Buffalo, New York-based Life Storage have fallen 18% in the past year. Public Storage are down 15% during that period, giving it a market value of $54 billion.

(Updates with Life Storage’s statement in fifth paragraph.)