Kite paying $1.2B for rival real estate developer

Indianapolis-based Kite Realty Group Trust is buying privately held Inland Diversified Real Estate Trust Inc. for $1.2 billion in an all-stock deal.

The combined company, which would have a market value of more than $2 billion, plans to retain the Kite name, its New York Stock Exchange listing and its headquarters in Indianapolis, along with John A. Kite as CEO. The companies announced the merger Monday morning.

Kite is a smaller company by assets and market cap than Inland, which is why Kite shareholders will own about 40 percent of the combined company. Based on Kite's closing share price of $6.15 on Feb. 7, the deal values Inland at $10.50 per share.

The deal increases Kite Realty’s portfolio to 131 properties with more than 20 million square feet in 26 states with a combined enterprise value of about $3.9 billion. It also gives Kite access to new markets, including Las Vegas, Virginia Beach, Va., and Salt Lake City.

“Inland Diversified has assembled a very well located, high-quality portfolio,” John A. Kite said in the statement. “The asset and tenant quality and strong demographic profile will be a great complement to our portfolio.”

In pre-market trading Monday morning, Kite shares had climbed nearly 6 percent to $6.50.

The merger is expected to close late in the second quarter or in the third quarter of this year, subject to the approval of shareholders of both companies.

This story will be updated.