Public Storage 2005 Annual Report Download - page 13
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apart from the rest of the competition. In the long run, if we continue to improve our
competitive advantages, lower our costs of capital and deploy incremental capital at reasonable
rates of return, our owners should benefit from sustained growth in cash flow per share.
Shurgard Transaction
On March 6, 2006, the boards of directors of Public Storage and Shurgard approved an
agreement under which Public Storage will acquire Shurgard for a total value of approximately
$5 billion. The agreement is subject to various conditions, including approval by the shareholders
of both Public Storage and Shurgard. Each share of Shurgard’s common stock would be
exchanged for 0.82 shares of Public Storage common stock. Following the close, Shurgard
shareholders would own approximately 23% of the combined company while Public Storage
shareholders would own the remaining 77%. The transaction is expected to close by mid year.
This transaction creates a company that will have a combined total market capitalization of
approximately $18 billion (based on current valuations), annual revenues in excess of
$1.5 billion and an exceptional portfolio of over 2,100 facilities in 38 states and seven
European countries. It will be the largest self-storage company in the world with significant
operating platforms in both the United States and Europe, suitable for continued expansion.
This combination creates a global enterprise with critical mass and leveragable strengths that
has the opportunity to achieve superior revenue growth, lower operating expenses, lower
capital costs and improved operating efficiency. There will be costs to implement this
combination, and most of the benefits will not be reflected in our 2006 operating results. We
will keep you informed of our progress.
In closing, I am personally grateful to our workforce of more than 4,000 employees and to our
senior management team, all of whom are the primary reason for Public Storage’s many years
of success and leadership in the industry.
Ronald L. Havner, Jr.
Vice-Chairman of the Board, Chief Executive Officer
and President
April 10, 2006