Public Storage Submits an All-Stock Acquisition Proposal for Life Storage; We Maintain $326 FVE

No-moat Public Storage submitted an all-stock transaction proposal for its smaller rival Life Storage. The company proposed an exchange ratio of 0.4192 Public Storage shares for each Life Storage share, representing a 19% premium based on the 20-day trailing share prices for the two companies. The shares of Life Storage are trading about 12% higher after the disclosure of the acquisition proposal. We think that the deal can be a win-win for both companies if it gets executed at the current price. It will be a positive for Life Storage shareholders because of the acquisition premium associated with the deal. In our opinion, the deal will also be mildly positive for Public Storage shareholders given the possible synergies and the relative valuation of the two companies.