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Blackstone raises Equity Office offer to $22.3 billion to best Vornado, comes close to record

Blackstone raises Equity Office offer to $22.3 billion to best Vornado, comes close to record

Private equity firm Blackstone Group on Thursday raised its offer to buy Equity Office Properties Trust by 11 percent to $22.3 billion (euro17.18 billion), or $54 (euro41.61) per share in cash, topping a rival bid from Vornado Realty Trust as it made the second-biggest private equity buyout offer ever.
Including debt, the deal could be worth as much as $38 billion (euro29.28 billion), given $16.49 billion (euro12.71 billion) in Equity Office's debt reported as of Sept. 30. That valuation ranks it the largest-ever private equity buyout bid, surpassing the 1988 takeover of RJR Nabisco Inc. by Kohlberg Kravis Roberts & Co., according to data from Dealogic. Excluding debt, it is the second largest after RJR Nabisco, which was valued at $25.1 billion (euro19.34 billion) excluding debt.
The revised offer puts Blackstone, led by Stephen Schwarzman, in competition with Vornado Chairman Steven Roth to buy the company built by real estate mogul Sam Zell. Zell's nickname is the "grave dancer" for his affinity for buying distressed assets.
Investors may be betting that Roth won't back down. Shares of Equity Office rose $2.02 (euro1.56), or 3.83 percent, to $54.72 (euro42.16) _ above the Blackstone offer _ in afternoon trading on the New York Stock Exchange.
Shares of Vornado rose 75 cents, or 0.6 percent, to $125.40 on the NYSE.
The successful bidder will ultimately gain control over what Zell has developed into the nation's largest publicly traded owner and manager of office properties at a time when the commercial real estate market remains strong.
The value of the new offer from Blackstone is calculated based on the number of outstanding common shares, stock options and Series B preferred shares to be converted, which combine for a total of 413,442,174 shares.
Blackstone Group agreed in November to buy Equity Office in a deal valued at $20 billion (euro15.41 billion), or $48.50 (euro37.37) per share, but earlier this month Vornado Realty Trust joined Starwood Capital and Walton Street to submit a competitive bid of $52 (euro40.07) per share, or $20.37 billion (euro15.7 billion), 60 percent in cash and 40 percent stock.
Chicago-based Equity Office has set a Wednesday deadline for Vornado to raise its offer. Shareholders are scheduled to vote on Feb. 5 on the amended deal, which has been approved by Equity Office directors. The company said the transaction could close as soon as Feb. 8.
The termination fee on the deal was increased to $500 million (euro385.27 million) under certain circumstances, up from $200 million (euro154.11 million) previously. The termination fee does not preclude a revised bid from Vornado.


Updated : 2021-04-14 06:18 GMT+08:00