Sizeler Signs Controversial Buyout Deal

Sizeler Property Investors(SIZ Quote - Cramer on SIZ - Stock Picks) signed a definitive agreement to sell itself for $324 million, but the transaction's fate is uncertain, since two large activist hedge funds have already said they will not accept the deal.

Sizeler, a real estate investment trust that owns retail and apartment properties in the Southeast U.S., said Monday it agreed to be acquired by Canadian real estate company Revenue Properties for $15.10 a share in cash.

Sizeler had already announced a letter of intent for the merger in early August. Shortly after, hedge fund Mercury Real Estate Advisors blasted the company, saying it was "outraged" at the sale price.

Mercury, which owns 1.9 million shares, or 8.9%, of Sizeler, was partly annoyed because the merger price was a 6.5% discount to the company's July 31 52-week high and a 2% discount from the closing price on the day prior to the announcement.

But Mercury also was peeved because the buyer is a close affiliate of Mark Tanz, Sizeler's chairman.

"Mr. Tanz is the former controlling shareholder of Revenue Properties, a current shareholder of Revenue Properties, and was until very recently a member of the Board of Directors of Revenue Properties," Mercury CEO David Jarvis wrote in a letter to Sizeler's board, which was filed with the Securities and Exchange Commission.

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