Equity Residential and AvalonBay Communities have agreed to an all-stock merger that will form a housing rental company with an enterprise value of $69 billion, the firms announced on Thursday.
The companies said they have a 95% overlap in markets where they own rental properties, a concentration they expect to improve margins by enabling neighborhood-based operations, centralized services, and lower cost-to-serve.
Driven by reduced corporate overhead costs and property management expenses, the companies said the deal is expected to generate $175 million in gross synergies by the end of 18 months after completion.
Under the merger agreement, shareholders in Arlington, Virginia-based AvalonBay will get 2.793 shares of Chicago-based Equity Residential common stock for each share they own.
After Merger, AvalonBay CEO to Lead Business
Closing is expected in the second half of this year, and AvalonBay shareholders will own about 51.2% of the newly formed company and Equity Residential shareholders the rest.
The companies said the merger also will lead to a larger proprietary data set, which can improve AI-powered demand forecasting.
The companies said that AvalonBay CEO Benjamin Schall will lead the combined business and that Equity Residential CEO Mark Parrell will retire after the transaction closes.
