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UPDATE 1-Essex to buy BRE Properties for about $4.34 bln

Thursday, 19 Dec 2013 | 9:07 AM ET

Dec 19 (Reuters) - Essex Property Trust Inc said it would buy BRE Properties Inc for about $4.34 billion to become the largest publicly-traded apartment REIT in the U.S. West Coast.

The combined company will own about 56,000 multifamily units in 239 properties in southern and northern California and Seattle.

Under the terms of the deal, Essex will pay BRE shareholders $12.33 per share in cash and offer 0.2971 newly issued Essex shares for each BRE share held, valuing BRE at $56.21 per share.

BRE said this month that it was exploring strategic alternatives and was in exclusive talks with Essex.

BRE had rejected in July a $60 per share offer from Land and Buildings, saying that the investment firm "neither (had) the capital capacity or demonstrated transaction experience to execute an acquisition of BRE."

Essex said it received committed financing of $1 billion to fund the cash portion of the deal.

The company said the deal is expected to add 5-8 cents per share to its core funds from operations annually. The deal is expected to close in the first quarter of 2014.

Essex Chief Executive Michael Schall will head the combined company.

UBS Investment Bank acted as lead financial adviser to Essex and provided 50 percent of the committed bridge financing. Wells Fargo Securities advised BRE.

BRE shares closed at $55.91 on Wednesday on the New York Stock Exchange. Essex shares closed at $147.70.