The pitched battle for office REIT Equity Office Properties Trust (NYSE: EOP) is either winding down or about to get even more heated. The Chicago-based landlord founded by Sam Zell has given a Vornado-led investor group until midnight to counter Blackstone’s sweetened $38.3 billion offer for the company.
Still, the door remains open until Monday’s shareholder meeting in Chicago since the board and shareholders of EOP will have the ultimate say on the . Late today, however, media reports stated that sources close to the deal predict that Vornado will indeed make a counter offer later today.
The saga leading up to this critical point began nearly two weeks ago when the Vornado group made a $21.4 billion cash/stock offer on the company, or $52 per share, countering Blackstone’s initial bid of $48.50 per share.
If Blackstone’s most recent offer of $54 per share wins the day, the private equity giant will be buying EOP at a 20.8% premium to the closing share price – about $45 per share -- prior to the initial announcement of the deal on November 19th.
However, Blackstone may be paying two premiums. Yesterday, stock valuation and advisory firm ValuEngine Inc. released a research report, stating that EOP shares are 9.19% overvalued, and that the stock should be trading at $50.24. The firm also forecast the stock price to rise to $59.67 in the next 12 months. EOP stock closed at $54.66 yesterday.
Earlier this week, independent proxy advisory firm Institutional Shareholder Services (ISS) urged EOP shareholders to give Blackstone’s all-cash bid their blessing. It won’t be known how EOP feels about the offer for a few days: shareholders won’t formally vote on the Blackstone proposal until Monday. Another reason why EOP may accept Blackstone’s bid – EOP stands to pay a $500 million break-up fee if the deal doesn’t go through.
We’d like to hear your thoughts on this developing story. Email email@example.com.
Below is a recent sampling of what NREI readers had to say about the unfolding EOP deal:
“Blackstone will prevail. They have too much money to spend and don’t have to fear bad press if they overpay.” --Nathan Isikoff
“Who will win in the end will be determined by Sam Zell. If [Zell is] worried about his tax position, he’ll go with Vornado’s 60% cash -- 40% OP [operating partnership] unit offer. If he really wants to pull chips off the table, he’ll take Blackstone’s all-cash offer.” --David Sislen