Public Storage and National Storage Affiliates Announce Election and Support Agreement in Connection with Merger

Key Points:

• Merger Transaction: Public Storage (the “Parent”) is entering into a significant merger agreement with National Storage Affiliates Trust (“NSA” or the “Company”) and NSA OP, LP (the “Partnership”), among other entities. Under this agreement, NSA will be merged with a subsidiary of Public Storage, and the Partnership will merge with another Public Storage entity, making these entities wholly owned or controlled by Public Storage.
• Support Agreement: Certain key shareholders and unitholders (“Holders”) of NSA and the Partnership have entered into an Election and Support Agreement with Public Storage. This contract binds these Holders to vote in favor of the merger and related transactions, and restricts their ability to transfer their shares or units until the transaction is completed or the agreement expires.
• Voting Commitment: Holders are obligated to vote all of their shares and units (including any subsequently acquired securities before the closing) in favor of the merger and against competing proposals or actions that could delay or prevent the transaction. This includes any proposals that could adversely affect the transaction or breach the merger agreement.
• Restrictions on Transfers: Holders are generally prohibited from transferring their securities except for certain “Permitted Transfers” (e.g., pledges for financing, estate planning, or family trusts), which require transferees to also agree to be bound by these restrictions.
• Redemption Election: Holders are required to elect to have at least 50% of their Partnership OP Units and new units received in the transaction redeemed on a one-to-one basis for JV Units, in accordance with the merger agreement’s proration mechanics.
• Termination: The agreement is effective until the merger closes, the merger agreement is terminated, or certain other conditions trigger an early termination. Breaches of the agreement prior to termination can still result in liability.
• Disclosure: Public Storage and NSA are authorized to publicly disclose the identities and commitments of these Holders, including the terms of this agreement, which could be material to investors.
• Legal Framework: The agreement contains detailed legal provisions regarding jurisdiction, waiver of jury trials, severability, and assignment, providing for enforcement in Maryland and Delaware courts.

Shareholder Implications & Potential Price Sensitivity:

• Strong Support for Merger: The agreement ensures that significant shareholders and unitholders are contractually committed to back the merger, greatly reducing uncertainty about whether the deal will be approved. This support can be seen as a strong positive signal for investors, potentially impacting NSA and Public Storage share prices.
• Restrictions on Sale of Securities: Key Holders are restricted from selling their holdings, which may limit market liquidity in NSA and Partnership securities prior to the merger’s completion, potentially affecting share price volatility.
• Anti-Takeover Measures: The agreement explicitly requires Holders to vote against any alternative acquisition proposals, making competing bids less likely to succeed. This could limit potential upside from a bidding war but increases the probability of the current transaction closing as announced.
• Disclosure of Holders: The public disclosure of key Holders and their commitments adds transparency to the process, which may affect investor sentiment.
• Legal and Financial Certainty: The agreement provides for specific performance and injunctive relief, ensuring that Public Storage can enforce the commitments. Provisions for the waiving of jury trials and assignment restrictions further protect the deal structure.

Other Details:

• Holders Involved: The agreement is executed by major stakeholders, including Tamara D. Fischer, Arlen Nordhagen, Wendy P. Nordhagen, NORDHAGEN LLLP, The Nord Foundation, David G. Cramer, and the David and Naomi Cramer Trust.
• Legal Representation: Clifford Chance US LLP represents the Holders, and Wachtell, Lipton, Rosen & Katz represents Public Storage.
• Jurisdiction: The agreement is governed by the laws of Maryland (with some Delaware law for specific aspects), with exclusive jurisdiction in Maryland courts.

Conclusion

The Election and Support Agreement substantially increases the likelihood that the Public Storage–NSA merger will proceed as planned, with committed support from major stakeholders and robust legal enforcement provisions. Investors should view this as a significant de-risking event for the transaction, which could have a material impact on the share prices of both Public Storage and National Storage Affiliates.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The merger is subject to customary closing conditions and regulatory approvals, and there can be no assurance that it will be completed as described above.

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