American Realty Capital Properties Inc and NorthStar Realty Finance Corp said they were not currently in merger talks, a day after reports that American Realty was looking to buy the real estate financing company.
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NorthStar Realty shares fell nearly 7 percent to $16 before the bell. They had risen as much as 12 percent on Monday.
"ARCP actively evaluates opportunities and is in discussions with many companies over potential combinations; however, the company is not currently in discussions with NorthStar," American Realty said in a statement.
Sources told Reuters on Monday that American Realty, a real estate investment trust, was in talks to buy NorthStar Realty, a loan originator and manager of commercial real estate debt. The discussions were preliminary, and there was no guarantee a deal would materialize, the sources said.
"While NorthStar may engage in discussions with interested parties and focuses on maximizing shareholder value, NorthStar is not currently engaged in discussions with American Realty Capital Properties," NorthStar said in a statement on Tuesday.
The companies, which did not specify whether they were in talks previously, were not reachable for comment outside regular U.S. business hours.
New York-based American Realty has expanded in the "net lease" sector - where tenants pay most of the operating costs - by buying Cole Real Estate Investments Inc, CapLease Inc and American Realty Capital Trust IV.
NorthStar Realty shares closed up 7.3 percent at $17.20 on the New York Stock Exchange on Monday, bringing the company's market value to about $5.6 billion.
Shares of American Realty, which has a market capitalization of nearly $10 billion, closed at $12.62 on the Nasdaq.