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Equity Office bid raised by 11%

January 26, 2007|From the Associated Press

Private equity firm Blackstone Group on Thursday raised its offer to buy Equity Office Properties Trust by 11% to $22.3 billion, or $54 a share, in cash, topping a rival bid from Vornado Realty Trust as it made the second-biggest private equity buyout offer ever.

Including debt, the deal could be worth as much as $38 billion, given $16.49 billion in Chicago-based Equity Office's debt reported as of Sept. 30.

That valuation ranks it the largest-ever private equity buyout bid, surpassing the 1988 takeover of RJR Nabisco Inc. by Kohlberg Kravis Roberts & Co., according to data from Dealogic.

Excluding debt, it is the second largest after RJR Nabisco, which was valued at $25.1 billion excluding debt.

The revised offer puts New York-based Blackstone, led by Stephen Schwarzman, in competition with Vornado Chairman Steven Roth to buy the company built by real estate mogul Sam Zell.

Investors may be betting that Roth won't back down. Shares of Equity Office finished at $54.90 -- above the Blackstone offer -- up $2.20.

Shares of Vornado rose $1.11 to $125.76.

The value of the new offer from Blackstone is calculated based on the number of outstanding common shares, stock options and Series B preferred shares to be converted, which combine for a total of 413,442,174 shares.

Blackstone Group agreed in November to buy Equity Office in a deal valued at $20 billion, or $48.50 a share, but this month Paramus, N.J.-based Vornado Realty Trust joined Starwood Capital and Walton Street to submit a competitive bid of $52 a share, or $20.37 billion, 60% in cash and 40% stock.

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