MEMPHIS, Tenn. _ Memphis-based apartment company MAA and Atlanta-based Post Properties announced Monday an agreement to merge and have Post become part of MAA.
The coupling of MAA's 80,846 apartment units and Post's 24,162 units would create a publicly traded real estate investment trust, or REIT, that is focused on Sun Belt states.
The combined company's corporate headquarters will be in Memphis, and MAA will maintain a significant presence in Atlanta and Dallas.
The combined company is expected to have a total market capitalization of about $17 billion. MAA would continue as the fourth-largest public company based in Memphis with a market capitalization just behind International Paper Co.'s $19.1 billion. Market cap is the current stock price multiplied by the number of outstanding shares of stock.
In the agreement, each share of Post common stock will change into 0.71 shares of newly issued MAA common stock.
Former MAA equity holders will hold 67.7 percent of the combined company's equity, and former Post equity holders will hold 32.3 percent.
Intended to be a tax-deferred transaction, the all-stock merger is subject to customary closing conditions, including receipt of the approval of a majority of both the MAA and Post shareholders, the companies announced in a release.
The companies expect the deal to close during the fourth quarter of 2016.
The merger means MAA will have 105,000 apartment units in 317 properties.
The combined company's 10 largest markets, based on the number of its apartments, will be Atlanta, Dallas, Austin, Texas, Charlotte, N.C., Raleigh, N.C., Orlando, Fla., Tampa, Fla., Fort Worth, Texas, Houston and Washington
H. Eric Bolton, Jr., MAA chairman and chief executive, said in a written statement, "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."
David P. Stockert, Post's chief executive and president, said, "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."
Stockert added that Post shareholders are getting 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."
Both boards have approved the merger.
The number of directors on MAA's board of directors will rise to 13, of which three will be designated by Post from its existing board and appointed to the MAA Board.
Bolton will serve a chief executive and chairman of the combined company. Alan B. Graf Jr., FedEx Corp.'s chief financial officer, will continue to serve as lead independent director for the combined company.
The company will retain the MAA name and continue to trade under the ticker symbol MAA on the New York Stock Exchange.
Company leaders expect MAA to benefit from the elimination of overlapping costs. In addition, MAA expects the combined company to capture enhanced operating margins after full integration takes place in the year following the merger's closure.
The deal will not affect MAA's plans to move its headquarters from one Memphis-area location to another, an MAA spokeswoman said Monday. About 185 people work at the home office.
"No immediate change is expected to the number of employees at Memphis headquarters as a result of the merger," Jennifer Patrick said. "The number of staff headquartered in Memphis is expected to remain the same or may slightly increase as our needs demand."
MAA confirmed earlier this year that it will decide by this fall where in Memphis the company will move from its longtime headquarters building. That building's 40,000 square feet is no longer large enough.
"This deal does not affect our current relocation plans," Patrick said. "MAA corporate headquarters will remain in Memphis."
