Vornado bids $37.6bn for EOP

The battle for Equity Office has stepped up after a trio of investors led by US REIT Vornado Realty Trust made an unsolicited approach for the company in the wake of Blackstone’s offer last year.

Equity Office said in a statement today that Dove Parent, a consortium comprising Vornado, Starwood Capital and Walton Street Capital, has made an “unsolicited” $52 per share offer for the business, which would value the company at $37.62 billion (€30 billion).

The offer is to pay 60 percent of the value in cash and 40 percent in Vornado Realty Trust shares. Vornado, chaired by Steven Roth, is proposing to acquire about half of the Equity Office portfolio, with Starwood and Walton Street slicing up the rest.

The bid trumps an earlier all-cash offer from Blackstone at $48.50 per share or $36 billion in total, which was accepted by the Equity Office board in November.

However, sources close to the deal stressed that the rival bid was still at an indicative stage. The offer letter sent by Dove to Equity Office gives no explanation as to how the Vornado shares will be valued, and appears to suggest that the financing package has not yet been finalised. However, the three firms said they and their bankers – Lehman Brothers, JP Morgan, Barclays Capital, UBS and RBS Greenwich Capital – are “highly confident that sufficient debt financing will be available for this transaction”.

Blackstone will now await a response from Equity Office, before considering whether or not to raise its own offer.

Blackstone would be entitled to a break fee of $200 million if Equity Office goes to a rival group, under the terms of the original deal.