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Advisory firm backs bid for Equity Office

January 29, 2007|From Bloomberg News

Institutional Shareholder Services Inc. on Sunday recommended Equity Office Properties Trust holders accept Blackstone Group's $38.3-billion cash offer.

Equity Office shareholders, who were offered $54 a share for the largest U.S. office landlord, are scheduled to vote on the deal Feb. 5, the company said in a statement Sunday.

Equity Office shares rose above Blackstone Group's offer price, closing at $55.22 a share on Friday, as some investors speculated that Vornado Realty Trust might top Blackstone's bid. The two sides are vying for a real estate investment trust that owns or has stakes in 543 office buildings in the U.S. at a time when rents are rising and vacancy rates are falling.

"The surprising increase of 11% in its offer price now provides a 20.8% premium to the ... share price prior to the initial deal announcement," the ISS report said. "We recognize that EOP's share price is slightly above Blackstone's revised bid, which indicates the possibility of a higher bid resulting from a bidding war."

Equity Office spokeswoman Terry Holt declined to comment beyond the statement, and ISS spokeswoman Sarah Cohn declined to discuss the report. Vornado spokeswoman Wendi Kopsick had no comment.

On Jan. 25, Blackstone increased its offer from $48.50 a share to thwart a buyout attempt by Vornado Realty Trust. Equity Office has opened its books for Vornado and given it until Wednesday to make a competing bid.

Equity Office is expected to file a proxy today with details of Blackstone's new offer, which was made before Vornado could formalize its bid of $52 a share in cash and stock.

"The current bid offered by Blackstone appears to have culminated from an open bidding process, which has served to maximize the highest value for shareholders," ISS said.

Blackstone's bid tops the biggest leveraged buyout to date of $33 billion for HCA Inc. by Bain Capital and others in 2006.

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