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Vornado sweetens Equity bid

The $23.24-billion offer for the largest U.S. office landlord tops one from Blackstone Group.

February 02, 2007|From the Associated Press

CHICAGO — A group led by Vornado Realty Trust boosted its offer for Equity Office Properties Trust to $23.24 billion in cash and stock Thursday, topping a private equity firm's buyout bid.

The $56-a-share offer ups the stakes in a bidding war for Chicago-based Equity Office -- the nation's largest office landlord with such properties as Two California Plaza in downtown Los Angeles and AIG Sun America Center in Century City -- that comes amid a booming commercial real estate market.

Blackstone Group, Vornado's chief rival in the bidding, questioned the purported value of the Vornado offer and said it had no intention of increasing its own all-cash offer.

Equity said it would evaluate Vornado's proposal in due course but said its board of trustees continued to recommend approval of the Blackstone Group transaction.

"There can be no assurance that Equity Office will enter into a definitive agreement with Vornado," the company said in a statement.

Last week's offer of $54 a share cash from New York-based Blackstone countered a previous bid by Vornado, which joined Starwood Capital Group and Walton Street Capital in a $52-a-share cash and stock offer valued at $20.4 billion.

Blackstone originally agreed in November to buy the largest publicly traded owner and manager of office properties for $20 billion, or $48.50 a share.

Proxy advisory firm Institutional Shareholder Services Inc. said Sunday that it was recommending approval of Blackstone's sweetened $22.3-billion bid.

Including debt and dividends, Vornado values its latest offer at $41 billion.

The company said it would pay $31 a share in cash and $25 in stock for Equity Office, plus dividends to the closing of the deal. The offer allows Equity Office to continue to pay its regular quarterly dividends at the rate of 33 cents a share.

Shares of Vornado rose $3.39 to $125.74. Shares of Equity Office fell 40 cents to $55.15.

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