By Lisa Kerner
Charlotte, N.C., Nov. 5 - Gramercy Capital Corp. agreed to acquire American Financial Realty Trust for approximately $3.4 billion including the assumption of debt, it was announced on Monday.
American Financial shareholders will receive $5.50 in cash and 0.12096 of a share of Gramercy common stock for each American Financial share held. Upon closing, American Financial shareholders are expected to own some 31% of Gramercy's outstanding shares.
Both companies' boards of directors approved the transaction, which is slated to close in the first quarter of 2008.
Gramercy said the merger will transform it from a pure specialty finance company to a $7 billion-plus diversified enterprise with business lines that include commercial real estate finance and property investments.
"We believe that this major strategic acquisition will provide a powerful growth engine for the future," Gramercy chief executive officer Marc Holliday said in a news release.
"In a single stroke, it will make the company a leading player in commercial real estate ownership, and further differentiate us from our current peers."
American Financial chairman Lewis S. Ranieri added, "While the volatility in credit markets has been challenging, we've also witnessed good opportunities for growth of our business in the banking market." The company said it plans to continue paying quarterly dividends through the fourth quarter of 2007.
Banc of America Securities, LLC, Greenhill & Co., LLC, and Deutsche Bank Securities Inc. advised American Financial, while Greenhill & Co., LLC provided a fairness opinion. Gramercy was advised by Citi, Goldman Sachs & Co., and Morgan Stanley.
Gramercy Capital is a New York-based commercial real estate specialty finance company.
American Financial Realty Trust is a self-administered, self-managed real estate investment trust based in Jenkintown, Pa.
| Acquirer: | Gramercy Capital Corp.
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| Target: | American Financial Realty Trust
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| Announcement date: | Nov. 5
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| Transaction total: | $3.4 billion
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| Price per share: | $5.50 in cash and 0.12096 of a Gramercy share
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| Expected closing: | First quarter of 2008
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| Stock price of acquirer: | NYSE: GKK: $24.22 on Nov. 2
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| Stock price of target: | NYSE: AFR: $6.45 on Nov. 2
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