Realty Income Corp. added a cash payment totaling $55.5 million and increased its annual dividend to sweeten an offer to buy American Realty Capital Trust Inc.
The real estate investment trust, which owns and manages single-tenant retail properties, said Monday that the latest bid was its best and final offer in a deal expected to close later this month. It first announced that it planned to buy American Realty, based in New York, for about $1.9 billion in stock. Realty Income said then that American Realty shareholders would get 0.2874 Realty Income shares for each American Realty share.
In addition to the share exchange, Realty Income said it will assume about $526 million in debt and repay about $574 million of outstanding debt and transaction expenses. The companies said that boosts the total value of the transaction to $2.95 billion.
Realty Income said Monday it will add a cash payment totaling 35 cents per share to that share offer. It also said it will increase its annual dividend by 35 cents to $2.17 per share starting next month. That's up 22 cents from the dividend increase Realty Income estimated when the deal was announced.
If the acquisition doesn't close, Realty Income's board will raise the annual dividend by 10 cents per share.
American Realty Trust is a real estate investment trust that runs single-tenant, free-standing commercial properties. Chairman Nicholas S. Schorsch said in a statement the amended deal gives his company's shareholders both an immediate increase in the transaction value from the cash payment and an enhanced income stream from the higher dividend.
Earlier this month, American Realty said it strongly disagreed with an Institutional Shareholder Services analysis in which ISS failed to recommend that shareholders approve the deal.
American Realty will have to pay $4 million in expense reimbursement if its shareholders reject the deal but Realty Income stockholders approve it.
Shareholders from both companies will vote Jan. 16 on the offer.
Shares of Realty Income, based in Escondido, Calif., climbed 69 cents to $42.02 Monday in premarket trading.