Extra Space Storage Buys Life Storage for $12.7B

Extra Space Storage (EXR) shares lost ground after the self-storage facility provider purchased rival Life Storage (LSI) in an all-stock transaction worth $12.7 billion.

Extra Space indicated the deal values Life Storage shares at approximately $145.82 each, an 11.2% premium over their closing price on Friday. It noted that, at the time of the closing, Extra Space investors would hold a 65% stake in the company, with Life Storage shareholders having the remaining 35%.

The agreement is expected to create a firm with a market capitalization of approximately $36 billion and total enterprise value of about $47 billion. It will increase the size of Extra Space’s store count by more than 50%, giving it in excess of 3,500 locations. It adds over 88 million square feet of space, bringing the total to over 264 million square feet. 

Extra Space CEO Joe Margolis said that the company was impressed by the repositioning of Life Storage’s sites over the past seven years, putting quality storage assets in strong growth markets. He called the combination of the two firms “highly synergistic.”

Joseph Saffire, CEO of Life Storage, explained that after a “deliberate and comprehensive review, the board unanimously agreed the deal maximizes value today” and was the one “most likely to deliver superior long-term returns for our shareholders.”

Extra Space Storage shares declined 4% following the announcement, while shares of Life Storage gained 4%.