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Life Storage (LSI) entered into a definitive agreement to be acquired by Extra Space Storage (EXR) last week. The combined company is expected to have an enterprise value of roughly $47 billion, including debt. The transaction between the two companies is also expected to create the largest storage facility operator in the country by number of locations.
In 1982, Life Storage was founded as a financial planning firm in Buffalo, New York. The company entered the self-storage industry in 1985 by opening its first facility in Florida. It was formerly known as Sovran Self Storage and Uncle Bob’s Self Storage. In 2016, the company rebranded its facilities from “Uncle Bob’s Self Storage” to “Life Storage” and changed its name after acquiring Life Storage for $1.3 billion.
We added Life Storage as a potential deal in the works on February 5, 2023, when Reuters reported that Public Storage (PSA), the largest U.S. operator of self-storage properties, had unveiled an $11 billion hostile bid for Life Storage, ratcheting up attempts to buy its smaller rival after its earlier takeover attempts were rebuffed. Under the proposed all-stock deal, Life Storage shareholders would receive 0.4192 shares of Public Storage for each Life Storage share or unit, which equated to $129.3 per share based on Public Storage’s closing share price. On February 16, 2023, the Board of Directors of Life Storage unanimously concluded that the acquisition proposal submitted by Public Storage, significantly undervalues Life Storage and its prospects for future growth and value creation.
Under the terms of the agreement with Extra Space, Life Storage shareholders will receive 0.8950 of an Extra Space share for each Life Storage share they own, representing a total consideration of approximately $145.82 per share based on Extra Space’s share price close on March 31, 2023. At closing, Extra Space and Life Storage shareholders are expected to own approximately 65% and 35% of the combined company, respectively.
Joseph Saffire, Chief Executive Officer of Life Storage said, “Following a deliberate and comprehensive review, the Life Storage Board unanimously concluded that the pending transaction with Extra Space maximizes value today and is the transaction most likely to deliver superior long-term returns for our shareholders. Together with Extra Space, we expect to accelerate growth while maintaining our customer-centric focus and commitment to continued innovation. We are also pleased that Life Storage shareholders will participate in the tremendous upside of the combined Extra Space and Life Storage platform through a significant ownership stake in the combined company. I want to thank the Life Storage team for their continued unrelenting dedication and commitment to our business and customers.“