Public Storage Rebuffed in Takeover Attempt of Rival

Public Storage Inc., the largest owner of self-storage properties in the United States, said rival Shurgard Storage Centers Inc. rejected its takeover offer.

Glendale-based Public Storage said in a Securities and Exchange Commission filing that in mid-April it offered to buy Shurgard “at a premium” to Shurgard’s net asset value, but the company said it had “no interest in selling.”

Shurgard “did not inquire as to the size of this premium or demonstrate any interest in negotiating a satisfactory premium or any other aspect of a possible transaction,” Public Storage said in the filing.

Officials at Seattle-based Shurgard weren’t immediately available for comment. Public Storage officials declined to comment.

On the New York Stock Exchange, Shurgard’s shares fell $1.06 to close at $24.69 and Public Storage was unchanged at $22.94. The overture comes as a flood of self-storage centers comes onto the market, cutting occupancy rates and making it harder for property owners to raise rents.

In the fourth-quarter, earnings on those properties Public Storage has owned for at least a year rose 4.6%, down from a gain of 7.2% a year earlier. For Shurgard, the gain was 3.2%, down from 9.5%.

Public Storage revealed in March that it had acquired a 6.4% stake in Shurgard. The stake has been reduced to 6.2% as Public Storage sold 134,600 Shurgard shares on May 1, according to the filing.

Shurgard has an enterprise value--stock and debt--of about $1.28 billion, according to Salomon Smith Barney. The securities firm estimates Shurgard has a net asset value of about $28.50 a share. Public Storage has an enterprise value of about $4.4 billion.

Public Storage owns or has a stake in 1,323 self-storage properties in 37 states. Shurgard has interests in 380 self-storage properties in the United States and Europe.

As with Shurgard now, in 1998 Public Storage acquired a stake in Storage Trust Realty and offered to buy the Columbia, Miss.-based company for about $600 million.

Storage Trust initially rebuffed the offer, but later relented under shareholder pressure.