Kimco Realty Set to Acquire RPT Realty in $2 Billion Deal

Kimco Realty has announced an agreement to acquire RPT Realty, valued at approximately $2 billion in an all-stock deal, which includes preferred stock and debt assumption. This strategic move will bolster Kimco's pro forma equity market capitalization to $13 billion and expand its total enterprise value to $22 billion.

The players: In this transaction, JP Morgan is serving as the financial advisor, and Wachtell, Lipton, Rosen & Katz is providing legal counsel on behalf of Kimco. On the other side, Lazard is acting as the financial advisor, and Goodwin Procter LLP is the legal advisor representing RPT Realty. The merger is expected to be finalized at the beginning of 2024.

What the future holds: Following the merger, Kimco's portfolio will be enriched by the inclusion of 56 open-air shopping centers, with 43 being wholly owned and 13 held in joint ventures, comprising a combined area of 13.3 million square feet. Additionally, Kimco will acquire a 6 percent stake in a 49-property net lease joint venture. Notably, RPT Realty's assets are predominantly grocery-anchored, and this merger is anticipated to generate initial cost-saving synergies of approximately $34 million. 

This acquisition aligns with Kimco's strategic vision of expanding its presence in Coastal and Sun Belt markets, prompting the company to identify and plan for the divestment of select midwestern assets over time. Currently, Kimco owns a portfolio consisting of 528 properties.

The details: Further details of the deal include the fact that, upon completion of the acquisition, shareholders of RPT Realty will receive 0.6049 of newly issued Kimco shares for each RPT share they hold, equating to around $11.34 per RPT share, constituting a 19 percent premium compared to RPT's closing share price on August 25th. Following the merger, Kimco stockholders will own 92 percent of the combined entity, while RPT shareholders will retain an 8 percent ownership stake.

Kimco's CEO, Conor Flynn, emphasized that 70 percent of RPT's portfolio closely aligns with the company's strategic goals, highlighting the advantageous 20 percent or greater mark-to-market leasing spread within the portfolio. RPT's President & CEO, Brian Harper, underscored that the merger is in the best interests of all stakeholders, pointing out the share price premium and the enhanced long-term value positioning it offers.