Public Storage ( PSA) confirmed an agreement Tuesday to acquire Shurgard ( SHU), uniting two real-estate investment trusts in the self-storage space. The transaction calls for Public Storage to issue 0.82% of a share for each Shurgard share outstanding. Public Storage closed Monday at $79.46, giving the exchange a value of roughly $65.16 per Shurgard share. Shurgard closed Monday at $63.60, a price that reflected months of speculation about a possible acquisition. Public Storage will also redeem $136 million worth of Shurgard preferred stock and assume $1.8 billion of debt, giving the deal an overall value of about $5 billion. After the deal closes, Shurgard's current shareholders will own 23% of the combined company, which should boast a market cap of about $18 billion and hold interests in 2,100 facilities in 38 states and seven European nations. "The combination of Public Storage and Shurgard creates the largest self-storage company in the world, with significant operating platforms in both the United States and Europe, and enhances our prospects for continued growth and improved profitability," Public Storage said. "This transaction provides Shurgard's shareholders with a substantial premium for their shares and the opportunity to benefit from participation in the upside potential of the combined entity." The companies said that, given their geographic overlap, "economies of scale are expected in media." They expect to cut costs by reducing duplicate expenses for Yellow Pages and other advertising, management information systems, and other back-office functions. The transaction is subject to closing conditions, regulatory approvals, and the majority approval of both companies' shareholders. Members of the Hughes family, who collectively own about 36% of Public Storage's outstanding shares, agreed to vote their shares in favor of the transaction. Similarly, Charles K. Barbo, chairman of Shurgard, has agreed to vote his shares in favor of the transaction.