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Weingarten Realty Rises on $3.9B Deal to Be Bought by Kimco

Shopping-center owner Kimco is set to buy peer Weingarten Realty Investors for $30.32 a share, or $3.9 billion.

Weingarten Realty Investors  (WRI) - Get Weingarten Realty Investors Report shares advanced after it agreed to be acquired by Kimco Realty  (KIM) - Get Kimco Realty Corporation Report for roughly $3.9 billion of stock and cash.

The move to combine Kimco, Jericho, N.Y., and Weingarten, Houston, creates a major “open-air, grocery-anchored shopping center and mixed-use platform,” the companies said in a statement.

At last check Weingarten’s shares surged 11% to $30.37 while Kimco ticked up 0.5% to $19.58.

Kimco said in a statement it would pay $2.89 cash and 1.408 of its shares for each Weingarten share. The total, $30.32, is a near 11% premium to Weingarten's closing share price on Wednesday.

At closing, Kimco holders would own 71% and Weingarten holders 29% of the combine company.

The combined company will have a portfolio of 559 shopping centers and mixed-use assets comprising 100 million square feet of gross leasable area. The properties are concentrated mainly in the top major metro areas of the U.S., the companies said.

"This business combination is highly strategic, creating a stronger platform that is even more capable of delivering long-term growth and value creation,” Conor Flynn, chief executive of Kimco, said in a statement.

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"It also gives us even greater density in the Sun Belt markets we are targeting as well as visibility into the trends shaping necessity-based retail," Flynn added.

The deal, expected to close in the second half, will create a company with 559 open-air grocery-anchored shopping centers -- one of the better performing parts of the commercial real estate sector during the pandemic, CNBC reported.

The new company, which combines a pair of real estate investment trusts, will have a market capitalization of about $12 billion.

The 'potential of the integrated business is much greater than the sum of its parts," said Andrew Alexander, chairman, president and CEO of Weingarten in a statement.

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"The combined company’s increased size and scale, together with its financial strength, should drive an advantageous cost of capital, allowing the combined company to more readily pursue value creation opportunities," Alexander added.

Both companies boards approved the terms. The proposed merger is subject to conditions including approval from holders of both Kimco and Weingarten.

Barclays and Lazard are financial advisers to Kimco, while JPMorgan advised Weingarten.