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Bid War Breakout
By Ian L. Cooper
We’ve got a real horse race on our hands. When Blackstone struck a deal to buy Equity Office Properties (EOP) in November 2006 for $48.50 a share in cash, or $36 billion, including the assumption of debt, no one expected for Vornado’s consortium to counter bid with $52 a share. And both want EOP bad, considering that EOP owns or has stake in some 543 office buildings “at a time when rents are rising and vacancy rates are falling,” according to Bloomberg.com.
And we can’t say we see a near-term end to the race. But that all depends on if Vornado comes back with a counter bid versus Blackstone, which just upped the ante by about $2 billion to more than $38 billion. The new offer of $54 now turns up the pressure on Vornado to come back with an even higher bid.
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But is Vornado just spinning its wheels? We’ll have to wait and see. As of now, according to sources, EOP directors are likely to recommend Blackstone’s offer to shareholders. Even better for Blackstone, the breakup fee was increased from $200 million to $500 million. So, if EOP does a deal with another company, they’d have to pay that breakup fee to Blackstone.
As of now, a meeting of EOP shareholders to vote on the Blackstone deal is still scheduled for February 5, 2007. Completion of the deal, subject to approval, is expected around February 8, 2007. However, EOP will reportedly still provide information to Vornado should Vornado want to submit another offer by January 31, 2007.
We’ve got a real horse race on our hands. Stay tuned…
Take care,
Ian L. Cooper, Editor, Early Alert Trader