CHICAGO — Equity Office Properties and Menlo Park, Calif.-based Spieker Properties Inc. have entered into a definitive merger agreement in which Spieker will merge with Equity Office.

The transaction values Spieker at approximately $7.2 billion, which includes transaction costs and the assumption of approximately $2.1 billion in debt and $431 million in preferred stock. Equity Office will pay approximately $1.085 billion in cash and issue roughly 118.6 million new Equity Office common shares and operating partnership units in the transaction, which is expected to close in the second quarter. The transaction includes a $160 million break-up fee to Equity Office if the merger is not completed in certain specified circumstances.

Following the merger, Equity Office will own and operate 616 office buildings consisting of 124 million sq. ft. of office space nationwide, which includes 25 million sq. ft. of Spieker’s office properties. Equity Office will also acquire Spieker's industrial portfolio of approximately 13.5 million sq. ft. and its development properties totaling 1.7 million sq. ft.

The merger is subject to the approval of the shareholders of both companies.