PHOENIX (AP) -- Cole Credit Property Trust III Inc. has rejected a $6.7 billion takeover bid by American Realty Capital Properties Inc., saying Friday that the offer undervalues the company and is not in the best interests of shareholders.
The Phoenix-based company, which owns office, retail and industrial properties, is trying to fend off American Realty while it proceeds with plans to purchase its external adviser, Cole Holdings Corp., and go public.
American Realty, based in New York, invests mostly in retail and office properties.
American Realty announced a $5.74 billion bid for Cole Credit on March 20, which included a payment of at least $12 per share, in cash or through 0.8 of a share of American Realty for each Cole Credit share owned. A week later, American Realty increased that offer to $12.50 per share, bringing the value of the deal to $6.7 billion, or $9.7 billion including debt.
On Tuesday, to further sweeten the deal, American Realty said that up to 60 percent of the deal could be paid in cash rather than 20 percent.
Cole said the proposals undervalued the company and involved too much debt. The company also questioned American Realty's ability to fund the deal and the track record of its leadership.
American Realty Capital CEO Nicholas Schorsch said Cole is just trying to create a "distraction" so it can move forward with its own plans. "I'm not surprised they rejected the offer as they have not engaged," Schorsch said.
Cole said that its board has met regularly to review the offers but American Realty said the company has not been open to joint discussions between the two companies.
American Realty's Schorsch dismissed other claims, saying that his company would not have made a multi-billion offer if it could not fund it. He said the company has many options following the refusal, but has not decided what its next step is yet.
Shares of American Realty Capital Properties Inc. fell 8 cents to $14.72 in afternoon trading, but remain at the high end of their 52-week trading range of $9.77 to $14.92