GLENDALE, Calif.--(BUSINESS WIRE)--Aug. 1, 2005--Public Storage,
Inc. (NYSE:PSA)(PCX:PSA) announced today that PSA had made a proposal
for the combination of PSA and Shurgard Storage Centers, Inc.
(NYSE:SHU) through a merger in which each share of SHU common stock
would be exchanged for .80 shares of PSA common stock, representing a
current value per SHU common share of $53.40 based on PSA's close on
Friday, July 29, 2005. This represents a 14 % premium to the SHU stock
price at Friday's close. PSA is making the proposal public at this
time because PSA believes a merger of the two companies would be in
the best interests of the shareholders of PSA and SHU, and SHU has
refused to discuss the matter with PSA, stating that SHU is "not for
sale".
"We believe that the combination of Public Storage and Shurgard
will enhance our position as the premier self-storage operator," said
Ronald L. Havner, Jr., Chief Executive Officer of Public Storage. "Our
proposal provides Shurgard shareholders with an immediate premium for
their shares and the opportunity to participate in the upside
potential of the combined company. It is our preference to work
cooperatively with Shurgard, and we would like to commence discussions
with Shurgard immediately concerning our proposal. We believe the
benefits of this combination to both companies' shareholders are
simply too compelling to ignore. Given the substantial benefits that
would result from this transaction, we are confident that Shurgard's
shareholders and other constituencies will recognize this as a
compelling opportunity and enthusiastically support it."
Copies of PSA's July 8, 2005 proposal to SHU and SHU's July 26,
2005 response to PSA are attached to this news release.
Conference Call
A conference call has previously been scheduled for today at 9:00
a.m. (PDT) to discuss PSA's second quarter 2005 earnings results. The
participant toll free number is (877) 516-1540 (conference ID number
7411316). Additional information will be available during this
conference call regarding the merger proposal to SHU, as well as a
simultaneous audio web cast by using the link at www.publicstorage.com
under "Investor Relations" (conference ID number 7411316). An instant
replay of the conference call may be accessed through September 1,
2005 by calling (800) 642-1687 and through September 1, 2005 by using
the link at www.publicstorage.com under "Investor Relations." Both
forms of replay utilize conference ID number 7411316.
Company Information
Public Storage, Inc. is a fully integrated, self-administered and
self-managed real estate investment trust that primarily acquires,
develops, owns and operates self-storage facilities. The Company's
headquarters are located in Glendale, California. The Company's
self-storage properties are located in 37 states. At June 30, 2005,
the Company had interests in 1,480 storage facilities with
approximately 90.6 million net rentable square feet (839,000 rentable
units).
Additional information about Public Storage, Inc. and the proposal
to Shurgard Storage Centers, Inc. are available on the Internet. The
Company's web site is www.publicstorage.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These forward-looking
statements are subject to a number of risks and uncertainties, many of
which are beyond Public Storage's control, that could cause actual
results to differ materially from those set forth in, or implied by,
such forward-looking statements. All statements other than statements
of historical facts included in this press release are forward-looking
statements. All forward-looking statements speak only as of the date
of this press release. Public Storage undertakes no obligation to
update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. There can be no
guarantee that any transaction between Public Storage and Shurgard
will occur. In addition to the risks and uncertainties of ordinary
business operations, the forward-looking statements of Public Storage
contained in this press release are also subject to the following
risks and uncertainties: Public Storage's ability to successfully
integrate the operations of Shurgard and assumptions with respect to
the benefits to be realized from a potential transaction with
Shurgard, future revenues of Shurgard and Public Storage, the expected
performance of Shurgard and Public Storage and the expected cash flows
of Shurgard and Public Storage. For additional information about risks
and uncertainties that could adversely affect Public Storage's
forward-looking statements, please refer to Public Storage's Annual
Report on Form 10-K for the fiscal year ended December 31, 2004.
Additional Information
Subject to future developments, Public Storage may file with the
United States Securities and Exchange Commission a registration
statement to register the Public Storage shares which would be issued
in the proposed transaction. Investors and security holders are urged
to read the registration statement (when and if available) and any
other relevant documents filed with the Commission, as well as any
amendments or supplements to those documents, because they will
contain important information. Investors and security holders may
obtain a free copy of the registration statement (when and if
available) and other relevant documents at the Commission's Internet
web site at www.sec.gov. The registration statement (when and if
available) and such other documents may also be obtained free of
charge from Public Storage by directing such request to: Public
Storage, Inc., 701 Western Avenue , Glendale, CA 91201-2349,
Attention: Chief Legal Officer.
PUBLIC STORAGE, INC.
701 Western Avenue, Suite 200
Glendale, CA 91201-2397
Tel: (818) 244-8080
July 8, 2005Mr. Charles K. Barbo, CEO and Chairman of the Board
Mr. David K. Grant, President and COO
Shurgard Storage Centers, Inc.
1155 Valley Street
Suite 400
Seattle, Washington 98109
Dear Chuck and Dave,
Thank you both for taking the time to meet with Harvey and me. We
enjoyed catching up and reminiscing about the evolution of the
self-storage industry and its prospects. The similarity of our
corporate cultures is amazing.
I thought it would be helpful for you to have in writing some of the
benefits that we discussed for both companies by merging. We recognize
that you have a business plan that we assume is "shareholder value"
driven. We think a merger of our two companies would accelerate and
enhance the benefits to your plan, delivering an immediate increase in
value to your shareholders and also allow them to participate in the
enhanced upside of the combined business.
The benefits of a merger are totally shareholder value driven. The
benefits to your shareholders would include:
-- a combined company with ownership interests in over 2,000
quality properties in 38 states and seven European countries
-- a more active trading market for their securities
-- enhanced credit ratings and access to capital
-- reduced overall leverage
-- the combined company's financial resources and strong
financial position will facilitate expanded career
opportunities for the best people
-- lower general and administrative expenses
-- a more secure common dividend with greater upside potential
-- greater concentration of properties in faster growing markets,
such as Southern California and South Florida
-- higher FFO per share growth
-- financial capacity, post merger, to significantly grow in
Europe and the United States without jeopardizing the
company's credit rating
-- significant opportunities for revenue and expense synergies
We believe that the use of our national telephone reservation system,
as well as media advertising programs, which will be more cost
effective with a larger number of properties in major markets, will
drive revenue growth of Shurgard's properties. In addition, valuable
and important ancillary businesses, such as tenant reinsurance,
merchandise sales and truck rentals, could be expanded. Furthermore,
by spreading property level costs over a larger number of properties
in the same markets, we would be able to reduce a number of cost items
for the properties of both Shurgard and Public Storage, including
television and yellow pages advertising, casualty and liability
insurance and supervisory payroll. Through economies of scale, we can
also improve cost efficiencies of certain support functions, such as
HR, payroll and national telephone reservation system.
In short, we believe a combined company will deliver superior returns,
in which Shurgard shareholders will participate through their ongoing
equity interest in the combined enterprise.
As we stated in the meeting, we would hope that Dave Grant would
accept the role of President in the new combined enterprise.
We have structured a transaction that offers an immediate "premium" to
your current trading price and affords your shareholders the
opportunity to potentially increase the value of their existing
investment in a company with greater liquidity and increased
geographic diversification. We believe that this transaction will be
enthusiastically received by your shareholders. Our proposed structure
is:
-- Shurgard shareholders would receive 0.8 shares of Public
Storage common stock for each share of Shurgard common stock
(an implied value of $52.74 per share of Shurgard stock based
on today's close). This represents a 12% premium to the
Shurgard stock price at today's close and a 24% premium to the
average Shurgard closing price over the past six months.
-- So that the combined company would have the benefit of a
step-up in tax basis and therefore the enhanced ability to
retain free cash flow for growth, we propose that the
combination be structured as a taxable transaction.
We have been talking about combining our two great companies for
nearly a decade. The time is now. Combined, we can produce even
greater returns for our owners and even greater opportunities for our
employees. In addition, our "lenders", both debt and preferred, would
benefit from the enhanced credit-worthiness of the combined enterprise
and our owners would accordingly enjoy a lower cost of capital.
The transaction we propose would not be subject to any unusual
governmental or third party approvals, or any other significant
contingencies. We believe that this transaction can be completed
expeditiously.
This transaction has our full attention and highest priority. We hope
that you will be as excited as we are about the benefits of this
combination for both our companies and our respective shareholders,
and we want to work with your board and senior management towards the
prompt consummation of a negotiated transaction. We have engaged the
law firm of Wachtell, Lipton, Rosen & Katz to assist us in completing
this transaction in an expeditious manner. They and we are prepared to
start immediately to negotiate an agreement. Thank you for your prompt
consideration.
Sincerely,
/s/ Ronald L. Havner, Jr.
Ronald L. Havner, Jr.
Chief Executive Officer
----------------------------------------------------------------------
(Shurgard letterhead)
Via Overnight Mail
July 26, 2005Mr. Ronald L. Havner, Jr.
Chief Executive Officer
Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201-2397
Dear Ron:
I write in response to your letter of July 8. The Board of Directors
of Shurgard met to consider Public Storage's proposal to acquire all
of the outstanding shares of Shurgard.
The Board, with the assistance of financial advisors and legal
counsel, conducted a thorough review of your proposal. The Board
unanimously decided that the Company is not for sale and, therefore,
rejected your proposal. The Board determined that combining our
companies in a transaction as outlined in your July 8 letter would not
be in the best interests of Shurgard's shareholders.
Sincerely,
/s/ Charles K. Barbo
Charles K. Barbo
Chairman and Chief Executive Officer
CKB/lo
CONTACT: Public Storage, Inc.Clemente Teng, 818-244-8080, Ext. 141
or
Joele Frank, Wilkinson Brimmer Katcher
Joele Frank / Eric Brielmann, 212-355-4449
SOURCE: Public Storage, Inc.