Extra Space Storage Inc. agreed to buy smaller rival Life Storage Inc. for $12.7 billion, a deal that would create the largest number of locations of any U.S. retailer of warehouse space and challenge industry leader Public Storage Inc.
The companies said in a joint statement Monday that the combined company would be a real estate investment trust with more than 3,500 locations and 2 million customers. The deal is expected to generate at least $100 million in annual savings and improved real estate revenues.
Extra Space Storage Inc. agreed to buy smaller rival Life Storage Inc. for $12.7 billion, a deal that would create the largest number of locations of any U.S. retailer of warehouse space and challenge industry leader Public Storage Inc.
The companies said in a joint statement Monday that the combined company would be a real estate investment trust with more than 3,500 locations and 2 million customers. The deal is expected to save at least $100 million a year and increase real estate revenue. The companies rent out storage space to individuals and businesses, usually on a short-term basis.
Life Storage (ticker: LSI) investors will receive 0.8950 shares of Extra Space (EXR) for each share they own, worth about $145.82 based on Friday's closing price.
Life Storage shares rose 2.3% to $134.11 in premarket trading Monday. Extra Space shares fell 3.2% to $157.78.
Public Storage (PSA), currently the largest warehouse operator in the country, previously offered to buy Life Storage for $129 per share, but Life Storage rejected the offer, saying it undervalued the business. Public Storage said in its 2022 annual report that it had 2,869 properties in the U.S. at the end of the year.
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Public Storage shares rose 1% to $305.00.
“After a careful and comprehensive review, Life Storage's board of directors has unanimously concluded that the ongoing transaction with Extra Space is the transaction most likely to maximize value today and deliver superior long-term returns to our stockholders,” Life Storage CEO Joseph Safire said in a joint statement.
Email Adam Clark at adam.clark@barrons.com.
