American Land Lease Inc, a real estate investment trust, said it agreed to be acquired by private equity investment firm Green Courte Partners LLC for $14.20 a share in cash – a 264 percent premium to the stock’s closing price on Tuesday.
“We are not surprised by the announcement. We feel the transaction is priced on the aggressive side, given the current market uncertainty, and indicates a longer-term strategy on the part of Green Courte,” analyst Philip Martin of Cantor Fitzgerald told Reuters.
Shares of the Clearwater, Florida-based company more than quadrupled and were up $8.35 at $12.25 in afternoon trade. The company’s stock was the biggest percentage gainer on the New York Stock Exchange.
The deal, valued at $438 million, including debt and preferred stock, would double the size of Green Courte Partners’ portfolio.
American Land Lease, which began evaluating strategic alternatives in July, expects Green Courte Partners, affiliates of Green Courte Partners LLC, to commence a tender offer before Dec. 23 for all outstanding shares.
“The problem with the company has been its small size for a publicly traded company, which has limited participation by potential investors,” said Martin, who believes the deal is a positive for the company.
Shares of American Land Lease have slumped from a 52-week high of $22.89 in mid-August to $3.90 at close on Tuesday.
The analyst cut his price target to $15 a share, from $26 on American Land Lease but maintained his “buy” rating on the stock.
The company owns, develops and manages housing communities in Alabama, Arizona and Florida — one of the areas badly affected by the housing slump in the United States.
Wachovia Capital Markets advised American Land Lease on the deal. (Editing by Amitha Rajan)