Jacksonville, Fla.-based Regency said late Monday it will offer 0.45 of a Regency share for each Equity One share, which translates into a price of $4.56 billion for Equity One stock and will give the target's shareholders 38% of the enlarged company.
The fusion will unite Regency's 307 largely grocery store-anchored centers with their 42.1 million square feet of floor space with an Equity One portfolio comprising 112 malls covering 15 million square feet that are largely in urban locations on the East and West coasts, with the highest concentration in Florida and Georgia.
Based on Regency's $69.86 closing price in New York Monday, the offer price translates into just under $31.44 per Equity One share, which is a near-13% premium to Equity One's $27.87 closing price Monday. Shares in both stocks had closed up on Monday, with Equity One up 2.2% and Regency 1.8% higher. The shares have delivered a similar one-year return of more than 11%.
"Bringing together these two highly complementary businesses creates a best-in-class platform capable of delivering sustained growth and value creation over the long-term," said Regency chairman and CEO Martin E. Stein Jr. in a statement.
Stein will head the enlarged company, which will keep its Jacksonville, Fla. headquarters.
Equity One and Gazit-Globe (GZT - Get Report) chairman Chaim Katzman will become vice chairman and serve as Gazit-Globe's board representative on an expanded 12-strong board. New York and Tel Aviv-listed Gazit-Globe owns 34% of Equity One and will own 13.2% of the combined entity, making it the leading shareholder.
It wasn't immediately clear whether there would be a role for Equity One CEO David Lukes, though Equity One will get to nominate two of the three new board directors.
The companies expect the union to generate $27 million in annual run-rate cost savings by 2018 and additional, unquantified synergies thanks to the entity's increased scale.
Both sets of shareholders must approve the transaction, which the companies expect to close during the first quarter or early second quarter next year.