Kite Realty Group Trust, Retail Properties Of America To Merge In $7.5 Bln Deal

Kite Realty Group Trust (KRG) and Retail Properties of America, Inc. (RPAI) announced Monday that they have entered into a definitive merger agreement, under which RPAI would merge into a subsidiary of KRG. Following the deal, KRG will continue as the surviving public company.

The combined company is expected to have an equity market capitalization of approximately $4.6 billion and a total enterprise value of approximately $7.5 billion upon the closing of the deal.

The deal is expected to be immediately accretive to earnings per share upon realizing cash expense synergies of $27 million to $29 million.

Under the deal terms, each RPAI share will be converted into 0.6230 newly issued KRG common shares in a 100% stock-for-stock transaction. The transaction assumes a KRG share price of $20.83, which was the closing price on July 16. This represents a 13% premium to RPAI’s closing stock price.

The transaction is expected to close during the fourth quarter of 2021 subject to customary closing conditions, including the approval of both KRG and RPAI shareholders.

On a pro forma basis, following the closing of the transaction, KRG shareholders would own approximately 40% of the combined company’s equity and RPAI shareholders would own approximately 60%.

The merger will create an operating portfolio of 185 open-air shopping centers comprised of approximately 32 million square feet of owned gross leasable area.

The KRG management team will lead the combined company, with John Kite as Chief Executive Officer, Thomas McGowan as President and Chief Operating Officer and Heath Fear as Chief Financial Officer.

Upon completion of the merger, the company’s headquarters will remain in Indianapolis, Indiana. The company will retain the Kite Realty Group name and trademarks and will continue to trade under the NYSE symbol KRG.

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