W.P. Carey (WPC) announced this morning that it is buying an affiliated real estate investment trust, Corporate Property Associates - 16 Global, Inc. (CPA 16), in an all-stock transaction valued at $4 billion. The merger, which requires approval from shareholders in both companies, is expected to close in the first quarter of 2014. WPC is purchasing CPA 16 at an exchange ratio based on a value of $11.25 per share. The exchange ratio allows for a price adjustment based on the value of WPC stock before the close of the transaction.
WPC plans to boost its dividend to $3.52 per share, a $.16 per share increase, or 4.76%, upon the completion of the merger. The combined company will have an enterprise value of over $10 billion, according to WPC's press release announcing the transaction.
The market likes the news. In early trading WPC's stock is up over 5%.
This transaction comes on the heels of American Realty Capital Properties' planned merger with American Realty Capital Trust IV, which is scheduled to close by the end of the third quarter, and the anticipated listing of Wells REIT II, now named Columbia Property Trust.