American Realty Capital Properties said it would buy Cole Real Estate Investments for $11.2 billion to create the largest net-lease real estate investment trust (REIT) in the United States.
Net-lease REITs have been attracting investors as tenants pick up most of the operating costs and the properties are leased for long periods, performing like a high-dividend bond.
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ARCP, which has been making deals to expand in the net lease sector, said the Cole acquisition would increase the size of its portfolio to 3,732 properties.
Realty Income Corp , the current market leader, had a portfolio of 3,013 properties as of December, according to regulatory filings.
American Realty said it would offer 1.0929 of its shares or $13.82 in cash for each Cole share.
The stock offer is valued at $14.59 per Cole share, representing a premium of 14 percent to Cole's Tuesday close.
Shares of both Cole and American Capital were unchanged before the bell.
ARCP said it had secured $2.75 billion in financing from Barclays for the deal, which is expected to close in the first half of 2014.
Barclays and RCS Capital, the investment banking division of Realty Capital Securities LLC, were financial advisers to ARCP. Goldman Sachs was the exclusive financial adviser to Cole.
(Reporting by Mridhula Raghavan in Bangalore)