PSA - Life Storage Extra Space Storage sign $12.7B all-stock merger deal

2023-04-03 06:53:59 ET

Life Storage ( NYSE: LSI ) shares rose over 5% premarket on Monday after it signed a $12.7B deal to merge with competitor Extra Space Storage ( NYSE: EXR ).

The deal will create the largest storage-facility operator in the U.S. in terms of number of locations. The combined company will be valued at around $47B, including debt.

Life Storage ( LSI ) stockholders will get 0.8950 of Extra Space ( EXR ) share per share they own, or $145.82, according to the deal. The company earlier rejected a $129/share bid from Public Storage ( PSA ), currently the largest storage operator in the country, noting it "significantly" undervalued the business.

At closing, Extra Space and Life Storage shareholders are expected to own approximately 65% and 35% of the combined company, respectively.

For Extra Space ( EXR ), the deal will add around 1,200 properties to boost its storage portfolio by more than 50%. The combined real-estate investment trust will have more than 3,500 locations across 264M square feet.

Three members from Life Storage ( LSI ), including CEO Joseph Saffire, will join Extra Space's ( EXR ) board.

Extra Space CEO Joe Margolis said, "The business combination is highly synergistic, creating an even stronger combined company that will drive long-term, outsized operational and external growth opportunities through scale efficiencies, higher retained cash flow, data analytics, third-party management relationships and more."

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