Blackstone Wins Tug-of-War for Equity

By the time that a formal Equity Office Properties shareholders’ meeting convened in Chicago today, the takeover by Blackstone Group LP was pretty much a done deal. Earlier that same morning, rival suitor Vornado Realty Trust and its allies had agreed that the high-stakes game was no longer worth the candle, whereupon the bidding team announced their withdrawal from the heated contest to win the nation’s largest office landlord.

The meeting started on time, and within a matter of minutes the result was confirmed. Blackstone, the initial suitor back in November, had prevailed. Of the shares voted, about 91% approved the takeover by Blackstone, representing an affirmative vote by about 71% of all outstanding shares.

For a yes vote, Equity shareholders are receiving $55.50 per share, or $23.2 billion all together. Along with the assumption of roughly $16 billion of debt held by Equity, the entire deal amounts to more than $39 billion, and it’s widely viewed as the largest leveraged buyout (or LBO) in U.S. history.

The bidding war for EOP began in earnest in January, after Vornado, leading a group that also included Starwood Capital and Walton Street Capital, made a $52 per share cash-and-stock counteroffer to Blackstone’s initial offer of $48.50 per share. By early February, both bidders had upped the ante further, but eventually Blackstone’s $55.50 per share all-cash bid won the day over Vornado’s $56 per share cash-and-stock offer.

During a press conference following the vote, Equity CEO Richard Kincaid said he thought the deciding factor was the all-cash nature of the winning bid.

“It maximized the certainty that the deal would close this week,” he noted. He wasn’t surprised, he added, that Vornado decided to call it quits either. “The hurdle was just too high. There wouldn’t have been enough profit in it to make a higher bid worthwhile.”

For its efforts, Blackstone is getting whole or partial interests in 543 office buildings nationwide, totaling about 103.1 million square feet. It’s widely thought that Blackstone – which holds around 10% of an equity stake in the deal – will begin selling off parts of the vast portfolio to begin paying down debt.

“There’s a lot of demand for office properties in most markets now, and there’s upward pressure on rents in most places,” said Kincaid. “Because they paid more than they anticipated, they might have to sell more properties than they anticipated, but they’ll do well.”


Acceptable Use Policy
blog comments powered by Disqus

Photo Galleries

New York's Star Deals

http://nreionline.com/images/nyc_big_deals_homepage_thumb.jpgThe city that never sleeps is also the city that never stops growing, not even in the midst of recession. And deals, both bold and unprecedented, continue to be done. Check out image of New York's big deals.

Hudson Yards Development

http://nreionline.com/photo_gallery/hudson_yardsCheck out images for Coach's new global headquarters, which will anchor the initial tower of the Eastern Rail Yards site within the 26-acre mixed-

Videos

JLL at ICSC 2012

http://nreionline.com/video/bjorson_thumbnail.jpgCheck out these videos from JLL at ICSC 2012 in Las Vegas...

 

Click here to view more videos.


Blogs


http://nreionline.com/blog/schein_blog_headshot.jpg

Real Vox

Traffic Court

The Full Nelson

Events

Strategic Real Estate Investment Conference

Date: Thursday, June 7, 2012
Time: 7:45AM-6:00PM
Place: 1290 Avenue of the America, 5th Floor
What: A full-day event exploring portfolio diversification through opportunistic and alternative investments....

Click here to view more events...

http://nreionline.com/nrei-300x125-house-091211-resourcebook-jpg.jpg

This Week's Most Popular

Current Issue

http://nreionline.com/april2012_cover.jpg

NREI Newsletters



Retail Traffic Newsletters

View NREI Newsletters

NREI Newsline
NREI Seniors Housing Finance and Development
NREI The Green Sheet
NREI Institutional Outlook
NREI Distressed Real Estate Strategies
NREI Daily/Central
NREI Daily/New York
NREI Daily/New Jersey
NREI Weekender
NREI Global Real Estate Monitor
REIT Insider
Retail Traffic Online
The Site Optimizer

Join the Conversation