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Public Storage to Acquire Rival Storage Trust Realty

November 13, 1998|From Times Wire Services

Public Storage Inc. said Thursday that it will acquire Storage Trust Realty, combining the mini-warehouse rivals in a deal valued at about $400 million, plus assumed debt.

The acquisition would solidify Glendale-based Public Storage's position as the largest self-storage developer in the country, giving it a market capitalization of $5 billion and expanding its holdings to almost 1,300 facilities in 37 states.

The combined companies would own more than 1,300 mini-warehouses in 37 states.

Public Storage, which accumulated a 5.99% stake in Storage Trust, made an unsolicited offer to buy the Columbia, Mo.-based company in August for $25 a share. Based on Storage Trust's closing price of $21.75 on Wednesday, Public Storage paid $23 a share.

"Storage Trust has an extremely high-quality portfolio of properties which fit strategically in our target markets," said B. Wayne Hughes, Public Storage's chairman.

The highly profitable but fragmented self-storage industry is one of the fastest-growing areas of the real estate market. Even before the acquisition, Public Storage was the industry leader with 1,089 storage facilities.

Under terms of the deal, Public Storage will pay shareholders of Storage Trust Realty 0.86 share of Public Storage in exchange for each of their shares.

The company said the value of the deal is based on Public Storage's closing stock price Wednesday of $26.69. The transaction includes $192 million in debt.

In New York Stock Exchange trading, Storage Trust stock rose 13 cents to close at $21.88, and Public Storage stock fell 69 cents to close at $26.

The deal, to be structured as a tax-free transaction, is expected to close in the first quarter of next year, pending final shareholder and regulatory approval.

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