European self-storage company Shurgard has agreed to buy UK rival Lok'nStore in an all-cash deal worth £378 million ($474 million) to expand in markets beyond London, the companies said in a joint statement on Thursday.
Shurgard has agreed to spend £11.10 pounds in cash for each Lok'nStore share, which it said represents a 15.9% premium to its closing price on April 10.
"The acquisition will allow Shurgard to increase its footprint in the two most attractive target markets outside of London," the company said in a statement.
Expected to be completed in July, the deal will add 32 Lok'nStore properties in the South East of England and five more in Manchester.
"It will double its size in the UK from 48 stores to 100 (including pipeline). It fits in their strategy to focus on large cities," said analyst Wim Lewi of KBC Securities.
Lewi added that Lok'nStore's decision to sell might have been guided by lower occupancy rates, for which Shurgard benefits from its platform strategy.
The company also said it will assess duplicative job roles in the merger, even if no firm decisions have been made yet. "It will likely result in the loss of the majority of roles across Lok’nStore’s administrative and head office functions," Shurgard said in a statement.
Lok'nStore shares, which will be delisted once the deal closes, rose nearly 18% to £1,13 at 1111 GMT, while Shurgard's rose 0.74% to €40.85.