CNBC's Faber: Blackstone Tries to Outbid Rival for Equity Office
Private-equity firm Blackstone Group raised its bid for Equity Office Properties Trust by 11.3%, to $54 a share, hoping to deliver a knockout blow to a rival bid led by Vornado Realty Trust , CNBC's David Faber reported.
Blackstone's new bid, which total's $22.4 billion, compares with a $52 a share cash-and-stock offer totling $21.6 billion from the Vornado group, which includes Barry Sternlicht of Starwood Capital Group Global and Neil Bluhm of Walton Street Capital.
Blackstone's bid "would seem to be a somewhat insurmountable lead, especially given the timing of this deal," Faber said. "There will be a shareholder vote on this all-cash offer--which has been accepted--on Feb. 5. Blackstone is saying it can close this deal by Feb. 8, so you get your money very quickly. Will Vornado choose to try and compete with $54? It remains very much unclear at this point."
There also is the higher breakup fee payable to Blackstone if the deal doesn't go through, Faber said. "It had been $200 million--it is now a $500 million breakup fee," he said. "It is at least a $55.50 deal to Vornado should it choose to come back and compete."
Equity Office said the amended termination fee would not preclude a revised proposal from the Vornado group or a proposal from any other potential bidder.
"Equity Office will continue to provide diligence information to the third party group ... so that the third party group will be in a position, if they so choose, to submit a definitive proposal to Equity Office by Jan. 31, 2007 for consideration by Equity Office's board of trustees," said
Equity Office in a statement.
Equity Office said its board of trustees continues to recommend the transaction with Blackstone.
Founded by real estate magnate Sam Zell in 1976, Equity Office in 2001 became the first REIT to join the Standard & Poor's 500 index.
The bidding frenzy for Equity Office continues a spate of mergers in real estate. Global real estate mergers reached a record $416.7 billion in 2006, up 67% on 2005, according to data provider Dealogic.