(Bloomberg) -- Extra Space Storage Inc. has agreed to buy real estate company Life Storage Inc. for $12.4 billion in an all-stock deal.
The transaction will create a company with a value of about $47 billion, including debt, according to a statement on Monday. Life Storage shareholders will receive 0.8950 of an Extra Space share for each Life Storage share they own.
Shares in Life Storage have risen by 33% this year, giving it a market value of $11.2 billion. The stock rose as much as 5% in premarket trading in New York. Bloomberg News reported in March that Extra Space was weighing an offer for Life Storage.
Life Storage, which operates more than 1,100 self-storage properties, rejected an $11 billion bid from Public Storage in February, saying the offer “significantly” undervalued the company.
Self-storage real estate benefited during the pandemic because people wanted more space while working from home. But demand and pricing power have begun to soften with a growing pipeline of new supply from developers.
Monday’s deal will increase the size of Extra Space’s portfolio by more than 50% by store count with the addition of Life Storage’s 1,198 properties, according to the statement.
Once the transaction completes, Extra Space and Life Storage investors are expected to own about 65% and 35% of the combined company, respectively.
Citigroup Inc. is lead financial adviser to Extra Space, with JPMorgan Chase & Co. also providing advice. Wells Fargo & Co. and Bank of America Corp. are working with Life Storage.
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