The Blackstone Group is attempting to seal its takeover of Sam Zell’s Equity Office Properties in the face of a rival bid.
The buyout firm has upped its offer from $36 billion (€27 billion) to $38.3 billion and has also doubled the size of the break fee it is entitled to if the deal collapses. It will now pocket $500 million rather than $200 million previously agreed with Equity Office if it fails to buy the office REIT.
The improved offer equates to $54 per share, which is $2 per share more than the offer from a rival consortium valued at $37.6 billion and $5.50 per share above its original bid.
Blackstone had its $48.50 per share offer accepted by its target in November, but last week Vornado Realty Trust, Starwood Capital and Walton Street Capital waded in with a rival offer of $52.50 per share, payable 60 percent in cash and 40 percent in Vornado’s shares.
Blackstone’s improved offer is being seen as an attempt to strike a decisive blow ahead of a meeting of Equity Office shareholders on February 5. Blackstone has already argued that the Vornado consortium’s cash-plus-shares bid is inherently more risky than its own all-cash bid.
In a statement, Equity Office said that in addition to the higher price, “the greater speed and certainty of closing and valuation of the Blackstone transaction” made it a more attractive proposition.
Equity Office said it was still co-operating with the Vornado consortium as it conducted its due diligence, but it has set a deadline of January 31 for any competing offer to be submitted. However, it reiterated its recommendation for the Blackstone offer.
Blackstone hits back in EOP battle
Blackstone is seeking a knockout blow in the battle for Equity Office by increasing its offer to $38.3 billion and ramping up its break fee.