American international self-storage company, Public Storage (NYSE:PSA) sweetened its bid to acquire smaller rival Life Storage (NYSE:LSI). After failed negotiations in the past two months, Public Storage is now offering $129 per share in an all-stock acquisition deal. In effect, each Life Storage shareholder would receive 0.4192 shares of Public Storage, implying a 19% premium based on the 20-day trailing volume-weighted average prices of PSA and LSI stocks as of Friday.
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The revised unsolicited offer was sent to Life Storage on Sunday. The revised bid estimates Life Storage at an enterprise value of roughly $15 billion, including debt.
Public Storage, a real estate investment trust (REIT), is one of the largest players in the U.S. public self-storage market. The company has grown over the years through acquisition, and by combining with Life Storage, it aims to have “a bigger real-estate portfolio and to reap economies of scale from tenant reinsurance, third-party property management and other areas,” a WSJ report stated.
Year to date, PSA stock has gained 12.5% while losing 9.3% over the past year. On the other hand, LSI stock is up 16.3% so far in 2023, while it lost 14.8% in the past 12 months.
Is PSA a Good Stock to Buy?
With one Buy versus one Hold rating, PSA has a Moderate Buy consensus rating. Further, the average Public Storage price forecast of $335 implies 8.6% upside potential to current levels.
