MAA (NYSE: MAA) and Post Properties, Inc. (NYSE: PPS) today announced that they have entered into a definitive merger agreement under which Post Properties, Inc. will merge with and into MAA, creating a Sunbelt-focused, publicly traded, multifamily REIT with enhanced capabilities to deliver superior value for residents, shareholders and employees. The combined company is expected to have a pro forma equity market capitalization of approximately $12 billion and a total market capitalization of approximately $17 billion.
Under the terms of the agreement, each share of Post common stock will be converted into 0.71 shares of newly issued MAA common stock. On a pro forma basis, following the merger, former MAA equity holders will hold approximately 67.7 percent of the combined company's equity, and former Post equity holders will hold approximately 32.3 percent. The all-stock merger is intended to be a tax-deferred transaction. The merger is subject to customary closing conditions, including receipt of the approval of a majority of both the MAA and Post shareholders. The parties currently expect the transaction to close during the fourth quarter of 2016.
The merger brings together two highly complementary multifamily portfolios with a combined asset base consisting of approximately 105,000 multifamily units in 317 properties. The combined company will maintain strategic diversity across urban and suburban locations in large and secondary markets within the high-growth Sunbelt region of the U.S. The combined company's ten largest markets by unit count will be Atlanta, Dallas, Austin, Charlotte, Raleigh, Orlando, Tampa, Fort Worth, Houston and Washington, DC.
Commenting on the merger, H. Eric Bolton, Jr., MAA Chairman and CEO, said, "The combination of MAA and Post will establish the leading apartment real estate platform focused on the high-growth Sunbelt region of the country with significant competitive advantages to drive superior value for our shareholders, residents and employees. The combined company will capture a broader market and submarket footprint, with improved rental price-point diversification that will support an enhanced level of performance over the full real estate cycle. Further, the Post development platform, with a strong history of value accretive new development, supported by the newly combined company platform, will expand external growth and accretive capital recycling opportunities for MAA."
Said David P. Stockert, Post's CEO and President, "This merger redefines the combined company in terms of product, capability and capacity for consistent growth. Its unique position in the apartment REIT space and strength of its financial position should drive an advantageous cost of capital and value for shareholders of both companies. Post shareholders are receiving an attractive value for our assets and business and a 24 percent increase in the dividend, while preserving the continuing opportunity to participate in the combined company's ongoing success."
Leadership and Organization
Both the Board of Directors of MAA and Board of Directors of Post have unanimously approved the merger. The number of directors on MAA's Board of Directors will be increased to 13, of which 3 directors will be designated by Post from its existing Board of Directors and appointed to the MAA Board. H. Eric Bolton, Jr., MAA's CEO and Chairman of the Board of Directors, will serve as CEO and Chairman of the Board of Directors of the combined company. Alan B. Graf, Jr. will continue to serve as Lead Independent Director for the combined company.
Upon completion of the merger, the company will retain the MAA name and will trade under the ticker symbol MAA (NYSE). Following the closing of the transaction, the combined company's corporate headquarters will be located in Memphis, TN with the company also maintaining a significant presence inAtlanta, GA and Dallas, TX, including management and resources supporting new development operations.
Anticipated Synergies
Annual gross synergies are estimated to be approximately $20 million. The combined company is expected to benefit from the elimination of duplicative costs associated with supporting a public company platform. In addition, through enhanced scale and leveraging of the combined company's state-of-the-art technology and operating systems, MAA expects the combined company to capture enhanced operating margins. These savings and enhancements are expected to be realized upon full integration, which is expected to occur over the 12-month period following the closing of the merger.
Pro Forma Operations and Balance Sheet
Both companies have high quality properties diversified across the high-growth Sunbelt region. On a consolidated basis the company will have a strong and balanced presence in both large and select secondary markets. With a significant regional and market overlap, meaningful opportunity for synergy and margin improvement is expected. The combined company is committed to a strategy aimed at driving superior long-term shareholder performance with a full-cycle performance profile and objective. In addition, the combined company is expected to have significant liquidity, a strong investment-grade balance sheet and a well-staggered debt maturity profile provided by long-standing lending partners.
Dividend Policy and Declaration
The timing of the pre-closing dividends of MAA and Post will be coordinated such that, if one set of shareholders receives their dividend for a particular quarter prior to the closing of the merger, the other set of shareholders will also receive their dividend for such quarter prior to the closing of the merger.
Advisors
Citigroup Global Markets Inc. is acting as financial advisor, and Goodwin Procter LLP and Bass, Berry & Sims are acting as legal advisors to MAA. JP Morgan is acting as financial advisor, and King & Spalding is acting as legal advisor to Post.
Conference Call and Webcast
The companies will host a conference call on Monday, August 15, 2016 at 7:30am CDT to discuss the proposed merger. Participants will include MAA's CEO and Post's CEO. The conference call-in number is (888)-632-3384 (Domestic); or 785-424-1675 (International) or interested parties can join the live webcast of the conference call by accessing the Investor Relations section of each company's website athttp://ir.maac.com or at http://www.postproperties.com/investor.
A transcript of the call and the conference call replay will be posted when available on the respective companies' websites under the Investor Relations sections.
