WSJ: Cerberus Management Preparing Offer for Equity Office Properties

Cerberus Capital Management is preparing what could be a more than $20 billion offer for real estate investment trust Equity Office Properties, which agreed in November to be bought by Blackstone Group, according to the Wall Street Journal.

The Journal quotes a person familiar with the matter as saying the rival bid could be launched in the next few days. With another $16 billion in assumed debt, that deal was believed to be the biggest leveraged buyout ever. But the paper also says the Cerberus-led group could decide against a bid at the last moment.

Shares of Equity Office Properties rose to $49.50 in after-hours trading on Wednesday on this report.

Equity Office had earlier agreed in November to be bought by Blackstone Group for $20 billion in the largest-ever acquisition of a real estate investment trust (REIT). Including debt, Blackstone's deal is worth about $36 billion.

A spokeswoman for Cerberus said the firm did not respond to market speculation. Equity Office declined to comment.

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.

Citigroup analyst Jonathan Litt said in a note on Tuesday that a bid for Equity Office that topped Blackstone's was increasingly likely and that an offer of between $50 and $52 per share could emerge. Litt wrote: "A consortium of private equity firms and possibly a public REIT is the most likely source of a topping bid given the size of the transaction."