American Realty Capital Properties' buyout bid over Cole Credit Property Trust is now seeing some improvements. Cole Credit is now considering the increased and improved takeover offer worth $6.7 billion. Additionally, shareholders of Cole Credit have filed a lawsuit seeking to block the Cole Holdings internal merger.
On March 27, American Realty had increased its bid to buy Cole Credit from its initial $5.7 billion offer. The new amount added up to around $9.7 billion, inclusive of debts.
In a statement to Bloomberg, Cole Credit said:
"A special committee of Cole's board of directors will carefully review the revised proposal in consultation with its advisers, and pursue the course of action that it believes is in the best interests of CCPT III and its stockholders."
Following the statement, shareholders of Cole Credit claimed that the chairman, Christopher Cole, was going ahead with the internal merger (Cole Holdings acquisition plan) without the votes of the stockholders. Apparently, Cole owns Cole Holdings Corp. and if the internal merger happens, he will be the only benefactor from the deal.
The shareholders have filed a lawsuit against the company in a Maryland State Court in Baltimore and have requested a judge to block the internal merger, reports Bloomberg
"The only winner if the merger is not voted on by shareholders and is consummated is Christopher Cole. The only loser if the merger is voted on by the shareholders and rejected is Christopher Cole," John Isbister, a lawyer for the shareholders, wrote in the filing.
In response to the lawsuit, the company stated that the filing was "without any merit" and they would defend the case aggressively, reports Bloomberg.
American Realty had offered to buy 100 percent of Cole Credit's outstanding common shares for around $12 per share or 0.80 units of its own stock for each Cole Credit share. The total value of the deal including debt would amount to around $9 billion. It had also sent a letter to Cole Credit asking them to call off their plan to buy Cole Holdings for around $20 million, change its name to Cole Real Estate Investments and list it on the New York Stock Exchange.
However, Cole Credit declined the offer stating that the bid was not in the best interests of its shareholders and it would pursue buying Cole Holdings. It also wrote in a separate letter to its business partners that American Realty's offer was misleading and was not meant for 'serious consideration'. It also mentioned that the bid instead appeared to disrupt business for Cole Credit and Cole Holdings, both.
American Realty then said that it was committed to the deal and was preparing an official response and had increased its offer. Considering the current state of affairs, the wind is blowing on the positive side for American realty.