Public Storage Launches $11-B Hostile Bid For Life Storage

Public Storage, the largest US operator of self-storage properties has unveiled an $11 billion hostile bid for Life Storage Inc., ratcheting up attempts to buy its smaller rival after its earlier takeover attempts were rebuffed, Krystal Hu, Anirban Sen, and Jahnavi Nidumolu reported for Reuters.

Photo Insert: Public Storage said the proposed combination would save costs and make Life Storage's business more efficient.

Under the proposed all-stock deal, Life Storage shareholders would receive 0.4192 share of Public Storage for each Life Storage share or unit, which equates to $129.3 per share based on Public Storage's closing share price on Friday.

The offer represents a premium of 19% based on the 20-day volume weighted average price of both stocks as of Friday. Including debt, the proposed deal would value Life Storage at about $15 billion, making it one of the largest takeovers of 2023.

Glendale, California-based Public Storage said Life Storage had rejected an offer under similar terms in January, forcing the company to make its approach public. Public Storage first approached Life Storage in December.

"We have been disappointed that Life Storage’s board has refused to engage constructively with us. Life Storage explicitly wrote on December 29, 2022 that Life Storage is ‘not for sale,’ reaffirmed that stance in a January 31, 2023 letter without offering any avenue for further dialogue, and has been unresponsive to our outreach," Public Storage said in a letter to Life Storage's management.

In a separate statement, Life Storage said it would review the proposed offer and "determine the course of action that it believes is in the best interests of all shareholders."

Public Storage also separately said that its board of trustees has increased its quarterly dividend from $2.00 to $3.00 per share.

A deal between the two Real Estate Investment Trusts (REIT) would consolidate a fragmented industry and create a self-storage giant that would have the scale to tackle competition in a post-COVID-19 world where demand for self-storage properties has waned as people have started returning to big cities.

Public Storage said the proposed combination would save costs and make Life Storage's business more efficient.

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