The Blackstone Group has once again improved its offer for Equity Office Properties, as it attempts to stave off a rival bid from a consortium of real estate investors and seal the largest leveraged buyout to date.
EOP said Blackstone had increased its offer to $55.50 per share, up from $54 per share, taking the total value of its bid to over $39 billion (€30 billion). This is still below the $56 per share offered by Vornado Realty Trust, which plans to sell approximately $10 billion of EOP assets to Starwood Capital and Walton Street upon closing. However, EOP said Blackstone’s all-cash bid is less risky and can be completed more quickly.
Blackstone’s latest move comes ahead of tomorrow’s shareholder meeting, where investors will vote on whether to accept its bid.
Some shareholders, representing about 12 percent of EOP stock, had previously come out in support of the Vornado bid, after the REIT sweetened its cash-plus-shares offer over the weekend. Vornado has effectively front-loaded its bid, so it will now pay $56 per share in cash for 55 percent of EOP within two months, and the remaining 45 percent in Vornado stock once the deal completes.
However, EOP said the deal was still more risky than the Blackstone offer, which requires no approval from shareholders and can be completed within two days of the vote. Since property shares are currently trading at historically high levels, it believes the extra time required to complete the stock part of the transaction could reduce the final value of the consortium’s bid.
It estimates the actual value of the revised Vornado proposal at $54.81 to $55.07 a share, given the additional risks inherent in the deal.
EOP reiterated its support for the Blackstone bid ahead of tomorrow’s vote. It also increased the break fee to $720 million, increasing the potential cost to the Vornado-led group if it does manage to win control of EOP.
Shares in EOP closed at $55.46 yesterday, up 8 cents.